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Retention is the sum of amount generally based on certain percentage of Running bill in terms of construction business. The retention will be the current asset for the contractor as it is to be received from the contractee in near future and it will be current liability to the contractee as it is to be paid to the contractor after successful completion of the projects or contracts.
in the books of contracataor
Dr. contractee A/ C-Retention money
Cr. Construction Revenue
In the books of Contractee
Dr. Contract Expenses
Cr. Contractor A/C(retention money hold)
Retention amount is deducted by the customer and retained the amount as per terms of the sales order until the project of the order is completed. Once the sales order is fulfilled the Retention Money is returned by the customer to supplier.
So,
Retention Dr
Accounts Receivable Cr
Retention is treated as a liability. A provision needs to be made in books for all retention monies to be paid out.
Retention is the part of every billing to be withheld till the specific period. It is the liability in the books of account to be paid of after the specific time.
Retention is amount deducted from Contractors payments and retained till the completion of the project. It is kept under current liabilities as Retention
Retention is Liability for the Contractee and part of Income hold by the Contractee for the specific period of time (depending on the agreed terms of Contract) of the Contractor.
I another term it is a part of Profit bifurcation too.
Retention is part of profit & treat as a provision to use in the future for emergency و we can keep% every year until % of the capital
Retention is a part of Profit bifurcation. It is a part of capital structure, kept separately as provision for future use by organisation.
Retention will be treated as liability till for certain period, once the period is over it can be paid to supplier as agreed or if the supplier is fail to deliver what he promised, the amount can be reduced from the expenditure.
Retention money having the nature of liability. The agreed % of amount is withheld from bill of suppliers as per the agreement till complete a particular time of period.
Retention will be part of Accounts Receivable, and it should be treat as not due until complete final documentations on that particular project.
