CIP (costs incurred and paid) is a liability or asset? Amounts billed and payments received is a asset or liability? if CIP < AP, then an asset increase happen(I think) or liability increase happen? Thanks. generally, CIP is larger than AP or not? is AP here is account payable? Thanks. when construction - in -progress exceeds billings, dose it mean the CIP > AP? Thanks. then a net asset occur or a net liability occur? Thanks.
damn, my head hurts… TMA (too many acronyms) but just think about it like this… if you’re billing a certain amount, say $100 but you’re only receiving a certain amount, say $70 then you’ve got a liability of $30… but remember you’ve got to NETT this with the construction-in-progress (asset) account… which is basically your cumulative costs incurred… if its % completion method, then you have to take into account the portion of gross profit you’re earning aswell… im not sure if thath answered your question or not, but hope it helped…
CIP – is not Cost Incurred and Paid – it is Construction In Progress – an equivalent terminology to Inventory.
if this scenario: cost incurred and paid in year 1: 3000, year 2: 6000 accout billed and payment received:year 1: 1,3000, year 2: 1,2000 then, which one will showup on balance sheet at liability, which is asset? after netting the cost, dose the asset increase or liability increas? Thanks. cpk123 Wrote: ------------------------------------------------------- > CIP – is not Cost Incurred and Paid – it is > Construction In Progress – an equivalent > terminology to Inventory.