How to write off WIP

When forming the cost of production and the close of an accounting period it is necessary to carry out the calculation and allocation of the cost of work in progress. Its volume is calculated based on the results of the inventory or documentary method, when evaluating the residues is made on the basis of primary documents.

Instruction

1. Determine the volume of work in progress the results of the inventory conducted at the end of the month. The results reflect in the inventory.
2. Calculate the percentage of WIP in its total volume during the accounting period. For this to the cost of work in progress at the beginning of the month, add the cost of the work performed. Divide the value outstanding at the end of months of work by the resulting number.
3. Distribute the sum of direct costs between completed orders and work in progress production prorated percentage of "unfinished" in the total amount of work. To balance the actual amount of direct costs at the beginning of the month add the total amount of actual and direct costs according to accounting data (turnover in the debit account 20 "Primary production") and multiply them to share work in progress at the end of the month.
4. In determining the composition of the expenses reducing taxable income, do not include the costs attributable to work in progress. Their value will be on the balances on account 20 "Primary production" (the account 23 "Auxiliary production", 29 "Service production").
5. Reflect incomplete production in account 46 "Executed stages on incomplete works", if your organization takes into account the costs of the individual phases of work performed.
6. Make accounting entry posting when payment by the customer of each completed stage of the work: Debit 46 Credit of account 90 "Sales". After the object is complete the wiring to write off WIP: the Debit of account 62 "Settlements with buyers and customers", Credit of account 46 "Executed stages on incomplete works".