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Are the materials purchased by contractors accounted for as inventory (raw materials, WIP, or finished goods) in their balance sheet?

California

Are the materials purchased by contractors accounted for as inventory (raw materials, WIP, or finished goods) in their balance sheet? And are these inventory transferred from raw material into WIP as in manufacturing when materials from inventory are requisitioned for installation?

1 reply

May 30, 2019

That's an excellent question. As a relative novice at construction accounting, however, I'm not sure I'll be able to provide much insight here - currently, our expertise at the Ask an Expert Center lies mostly in construction law and construction payment.

However, these resources appear to have some excellent, detailed information that might help to answer your question:
Construction Accounting – Balance Sheet Construction in Process Accounts
Accounting for Construction in Process

Hope that's helpful!

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