Capital Work in Progress

Capital Work in Progress, with account type Capital Work in Progress, holds the money spent on a building, plant or large installation that is not yet ready to use. Contractor bills, materials and engineer fees pile up here during construction, and nothing is depreciated because the asset is not yet in service. When the work is complete, the Asset record is submitted with its available-for-use date and BRAccount moves the total out of this account into Buildings or Plant and Machinery, and depreciation starts from that date. With CWIP enabled on the Asset Category, Purchase Invoices for fixed asset items post here automatically. A balance that never clears means a finished asset was never capitalised and is missing its depreciation.

CWIP balance = Sum of construction bills to date - Amounts transferred to the final asset account on completion.

1. 01Go to Assets > Asset Category, open Buildings and tick Enable Capital Work in Progress Accounting with this account.
2. 02Post each contractor bill through Invoicing > Purchase Invoice with the fixed asset item and Submit; the entry above posts.
3. 03Go to Assets > Asset; the draft Asset accumulates the bills as its gross cost.
4. 04When the godown is ready, set Available-for-use Date on the Asset and Submit.
5. 05BRAccount posts Dr Buildings, Cr Capital Work in Progress for the total, and the depreciation schedule begins.

Post contractor bills by Purchase Invoice while construction continues. BRAccount moves it to Buildings when the Asset is submitted as ready to use; no depreciation until then.

Dr Capital Work in Progress Rs 20,00,000, Cr Creditors Rs 20,00,000 for the first contractor bill on a new godown in Hetauda.