What Type of Costs are Included in Facebook's Balance Sheet for Construction in Progress
When it comes to construction in progress, Facebook, the renowned social media giant, includes various costs in its balance sheet. This article aims to provide a clear understanding of the types of costs involved, highlighting the positive aspects and benefits. Additionally, it outlines the conditions under which the information on Facebook's balance sheet for construction in progress can be useful.
I. Types of Costs Included in Facebook's Balance Sheet for Construction in Progress:
- Material Costs: Expenses related to purchasing construction materials such as concrete, steel, and electrical wiring.
- Labor Costs: Wages paid to construction workers, including skilled tradespeople and contractors.
- Equipment Costs: Expenses associated with machinery, tools, and equipment used in the construction process.
- Subcontractor Costs: Payments made to subcontractors hired for specialized tasks within the construction project.
- Overhead Costs: Expenses incurred for general project management, supervision, permits, and insurance.
- Administrative Costs: Costs related to administrative tasks, documentation, and legal procedures.
- Financing Costs: Interest expenses on loans or other financial arrangements associated with the construction project.
Construction in progress (CIP) is an asset that records the cost of construction work for a long-term asset that is not yet completed. This can include costs for materials, labor, and overhead costs that are directly related to the construction project.
How do you expense construction-in-progress?
Open a construction-work-in-progress account under the company's balance sheet's property, plant, and equipment section. If the company has multiple CIPs, the accountant will categorize each project separately. Track every cost, including materials, tools, labor, transportation, and extraneous expenses.
Is construction-in-progress a capital expenditure?
An accountancy term, construction in progress (CIP) asset or capital work in progress entry records the cost of construction work, which is not yet completed (typically, applied to capital budget items). A CIP item is not depreciated until the asset is placed in service.
What costs are capitalized during construction?
Capital costs may include labor, materials and supplies, transportation, engineering services, certain overhead costs, insurance, employee benefits, taxes, and interest. Similarly, an expenditure that adds to the productive capacity or improves the efficiency of an existing asset can be considered a capital item.
How do you account for construction contracts?
Revenues and expenses are calculated based on the percentage of the project that is completed. Completion percentage is calculated by dividing current costs by estimated costs. Revenues and expenses are recognized when a project's contract is completed.