Answer Happy

Construction Ltd. Commenced work on a contract worth $. 40 crores on 1st April, 1996. During 1996-97, they purchased construction materials worth $. 9.2 crores. During the same period, wages to the tune of $.6 crores were paid. Site overheads for the period amounted to $. 1.50 crores. The company hired plant from an associated concern. The plant was valued at the commencement of contract and at periodic intervals. Plant valued at $. 2.5 crores was introduced on 1st April, 1996. The valuation on 31st March, 1997 stood at $. 60 lakhs. This was after the plant-scrap was sold for $. 15 lakhs which Construction Ltd. Was allowed to retain. Certain materials worth $. 30 lakhs were found to be unsuitable for the contract and had to be sold at a loss of 20%. On 31st March, 1997, the value of materials on hand stood at $. 55 lakhs. Work certified for the year was $. 20 crores against which 75% payment had been received from the contractor. Work done but not certified as on 31st March, 1997 was $. 3 crores (at cost). The same was subsequently certified for $. 3.5 crores. The expected date of completion of the contract is 31st December, 1997. The estimated expenditure on wages during 1997-98, till completion of the contract, is $. 5 crores. Site overheads are expected to incur at 10% extra per month costs over 1996-97 figures. Besides the materials in stock on 31st March 1997, a further $. 8.5 crores worth of materials would be necessary to complete the contract. Fresh plant valued at $. 1.5 crores is expected to be inducted during 1997-98 and the residual value of this, at the completion of work, will be $. 40 lakhs. It is the policy of the company to provide for 2% of the contract value as contingencies and closing down expenses. Prepare, from the details given, construction materials account, plant account and contract account for 1996-97. Profits are to be based in proportion to costs incurred in line with the relevant international accounting standard.