Construction in progress (CIP) accounting is often misunderstood in the fixed asset world. Many think this just pertains to construction companies or the construction industry, when in fact, it means so much more than that.
Construction in progress simply refer’s to a project that is not yet completed that includes capital budget items. Companies may have one or even hundreds of CIP projects. Each project may include just a single line item or hundreds within a project. Within those line items, each one will have a transactions of expenses/invoices associated (money in and money out). At the end of the day (or project), the expenses for the individual line items are summed up, thus providing you with the total amount that needs to be capitalized as a fixed asset when placing that asset in service.
Examples of construction in progress accounting projects include (but not limited to):
- Actual building construction: brand new building; new wing addition to a hospital; new location building; etc.
- Assembling Machinery Equipment: tracking multi-component machinery for production at a manufacturing plant.
- Leasehold Improvement: building within the space you are leasing for your business.
- Remodeling project: renovations of the complete space or just one section.
Many companies utilize spreadsheets to track and organize all of the expenses for their projects, but often times these spreadsheets are very time consuming and labor intensive. Misrepresentation of the projects itself can occur due to manually entering in invoices, overlooking critical expenses, etc. No need to worry, there is a better solution out there. The Sage FAS CIP Accounting solution not only offers the full capability to track all aspects of your projects accurately, but also provides the reports necessary to ensure your project(s) are under your “budget” control.
If you need more info on the fabulous CIP Accounting solution, just holler via phone at (877) 824-6834 ext: 164 or via comment on this Blog entry.