Capital Work In Progress

Hi,
Shall I get some examples for Capital Work in Progress other than construction of building and installation of machinery?

Bindhu

Dear Bindhu,
Just check the following examples:
a) Refurbishing interiors of office premises
b) Changing whole plumbing system of building
c) Installation of false ceiling
d) Repair works at rooftop to control leakage
e) Installation of Sewage Treatment Plant (STP) in the basement
Hope these examples suffice your requirement.
Dinesh V Divekar


.
Hi,
Shall I get some examples for Capital Work in Progress other than construction of building and installation of machinery?
Bindhu

Actually we are in process of developing software for Fixed Asset Management. As a part of the same I want to take different scenarios for Capital Work in Progress and analyse / study, how we can handle each steps? for example raw materials used for construction of building need to be tracked or not....
For this purpose I want to collect different scenarios...
Bindhu

Hello Bindhu,
You need to clear your doubts about fixed assets. Please read Wikipedia. There is whole lot of information on it.
You have written that "for example raw materials used for construction of building need to be tracked or not...."
Let me clarify here that raw materials used for construction of building is not fixed asset. How can raw material be fixed asset? However, equipment or machinery that processes raw material into finished product is fixed asset. For example, concrete mixer is a fixed asset.
In simple words consumables are not fixed assets.
Ok...
DVD

Dear Dinesh,
What I mean by this "for example raw materials used for construction of building need to be tracked or not...." is, when we handle Capital Work in Progress, raw materials used should be tracked against same or not? Whether it should be tracked against CWIP ? Whether this also should be capitelised?
Bindhu

Good Morning Bindu
Sinceyou are in the process of development of Fixed Asset Management Software, you need to look into different types of industries. From your current post iit seems that you are concentrating on construction industry. It may not be sufficient. In fact the manufaturing industry will throw much light on Capital Work In Progress ( CWIP ).
The purchases made during the construction of a building, erection of a plant etc are initially considered as CWIP expenditure. Once the said Building / Plant is put to use ( ie Business activities are started ), all CWIP expenditure is converted into Capital Asset eg. Building , Plant & Machinery etc..
Hope it helps you to understand CWIP concept.
Chandrakant

• Need to give some clarification here.
• Building is made of stone, bricks, steel, cement etc. These are raw materials for a building. But when construction is completed a Capital Asset is created and value of the same is nothing but sum total of raw material used plus labor and other professional costs.
• Hence what Bindhu says is correct, raw material used for construction needs to be tracked to ultimately arrive at the value of asset (building).

• I am not sure whether IT Software and Systems used for running a business is treated as Capital Asset. Experts please advise.
• In case it is Capital Asset then IT Project to implement integrated systems or ERP is another example of Capital Work In Progress. These projects go on for years.

Dear V Kokamthankar,
Let me clarify here. When builder builds a building, for him the raw material like bricks, aggregate etc is consumable and not fixed asset. However, when he completes the construction and hands over the building to his client, it becomes capital asset for client.
Ok...
DVD
Need to give some clarification here.

• Building is made of stone, bricks, steel, cement etc. These are raw materials for a building. But when construction is completed a Capital Asset is created and value of the same is nothing but sum total of raw material used plus labor and other professional costs.
• Hence what Bindhu says is correct, raw material used for construction needs to be tracked to ultimately arrive at the value of asset (building).

Dear V Kokamthankar,
For buyer, IT software and systems used are capital assets. Any expenditure done on this count will go under capital budgeting.
Ok...
DVD

• I am not sure whether IT Software and Systems used for running a business is treated as Capital Asset. Experts please advise.
• In case it is Capital Asset then IT Project to implement integrated systems or ERP is another example of Capital Work In Progress. These projects go on for years.