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Compare and Contrast

Compare and Contrast

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Published by Tajul Islam
Production related contrast
Production related contrast

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Published by: Tajul Islam on Sep 06, 2013
Copyright:Attribution Non-commercial


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 Compare and contrast the procedure for verification of capital work-in-progress and production work-in-progress.

Not sure this is correct or not because it is from comments of a question. Production work-in-progress Material that has entered the production process but is not yet a finished product. Work in progress (WIP) therefore refers to all materials and partly finished products that are at various stages of the production process. WIP excludes inventory of raw materials at the start of the production cycle and finished products inventory at the end of the production cycle. Or Production work in progress (WIP) is the part of inventory that is currently being worked on and is yet in the production process. Work in progress is a stage in between the raw material and finished goods. It is no longer raw material because it has undergone some processing in the production process. It is also not yet finished goods because more processing has to be done to put it into its salable condition. WIP includes the items that are being fabricated or waiting in a queue for further processing or in buffer storage. So far we have discussed the work in progress which is inventory in the production process. But work in progress can also be of capital in nature. Work, such as construction of an asset, that has not been completed but has already incurred a capital investment from the company is also referred to as capital work in progress. It is usually recognized as an asset on the balance sheet. Capital WIP is referred to as Assets under Construction and are represented by a specific Asset class. Capital Work in Process (CWIP) is a holding account that records costs incurred during the design and construction of capital assets. The work in process could be a new capital asset or an addition to an existing capital asset. Costs are accumulated and displayed with a CWIP status until the capital asset is usable. CWIP accounts are integral parts of the asset inventory. It is an asset on the balance sheet that is not considered to be a final product, but must still be accounted for because funds have been invested toward its production. It is thus a work that has not been completed but has already incurred a capital investment. CWIP accounts display the accumulation of costs incurred, costs absorbed, costs apportioned during construction, and capital work that is in process.

Usually depreciation is not charged on Capital WIP. Following are some examples of capital WIP:

this means that work in progress more readily applies to consulting projects and construction projects. On the other hand.A building under construction  Both phrases exist and are often used synonymously. theh advancement of which is unknown (e. possibly covering a number of accounting periods. as would be the case in a manufacturing environment.  There is a difference based on the common usage of the terms capital work-in-progress and production work-in-progress. Given the implied duration. an application that has been submitted but not yet accepted or rejected). there is no highly engineered process in place for arriving at a final product. a stiil unfinished written work).g. Thus. Production work-in-progress implies that there is a manufacturing process in place where products are created under a standardized system.. Capital work-in-progress refers to a process. In both cases.A machinery under installation .g. capital work-in-progress applies more readily to a manufacturing environment. . I think that there does exist a difference between them.  The word work-in-progress implies a longer-term period during which a product is completed. Production work-in-progress is used of something that has been started and is on its way to completion (e.

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