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متابعة

Why is Capital WIP account maintained for capital expenditure?

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تم إضافة السؤال من قبل Nazmul Islam CMA , Manager , Robi Axiatal Ltd.
تاريخ النشر: 2016/10/14
Anil Lalwani
من قبل Anil Lalwani , Chief Accountant , Al Ahli Hospital

Many Thanks for invitation

In order to answer this question let's first understand what exactly is capital expenditure,

all the expenses, the benefit of which lasts more than a year is called capital expenditure,

like paid for purchase of Building, Machinery etc., Capital WIP means amount paid for

an asset but still asset is not ready to use and more time and funds need to make it usable

but by the time the date of balance sheet falls in such case the amount paid for asset is

taken under Capital WIP under assets, and when all amount is paid and asset become ready to use then we can treat it as normal asset.

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