Balance Sheet for Construction
Balance Sheet for Construction work-in-progress (CIP) is a long-term asset account that tracks the costs of a construction project that is not yet complete.
The CIP account includes the cost of materials, labor, and other expenses incurred on the project. Once the project can complete, the CIP account is transferred to the appropriate fixed asset account, such as land, buildings, or equipment.
Construction materials inventory is a current asset account that tracks the cost of construction materials that are not yet used on a project.
The construction materials inventory account is typically reduce when the materials are use on a project and increased when new materials are purchase.
The specific way that construction works and materials are categorize on a balance sheet will vary depending on the specific accounting practices of the company.
However, the general principles outlined above are typically follow.
Here are some additional things to keep in mind when categorizing construction works and materials on a balance sheet:
1. The CIP account subdivid into different projects, if necessary. This will help to track the costs of each project separately.
2. The construction materials inventory account can value at the lower of cost or market value. This means that the value of the inventory should be reduce if the market value of the materials has decreased.
3. The CIP account and the construction materials inventory account should be reviewed periodically to ensure that they are accurate. This is especially important if there have been any significant changes in the cost of materials or the progress of a project.
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