3 Replies Latest reply: Feb 10, 2013 1:19 AM by Dina Rotem RSS

    How to offset clearing account in project accounting?

    oracle_samba
      Dear Experts / Dina,

      During project costing process while attributing different type of cost, you end up in generating debit to expense account (Expense) and credit to clearing account (liability a/c). When this transactions interfaced to general ledger, how to offset this clearing accounts?

      First of all does these needs to be offset ideally or it is fine to be remain in general ledger?

      Example -
      Labor cost - Debit to Labor Cost Expense Account ( Expense)
      Credit to Payroll clearing account ( Liability)

      Mis Cost - Debit to MIS expense Cost A/c
      Credit to MIS clearing account

      Thanks
        • 1. Re: How to offset clearing account in project accounting?
          Dina Rotem
          Hi

          The project accounting goal is to allocate real company costs to various projects.
          The real cost for the company is the payroll. When you distribute labor cost you actually allocate the payroll expenses across the projects. Therefore, the clearing account of the labor distribution is offseting the payroll cost.

          The same is for the MIS expenses. You need to verify the real cost is charged to GL, and then the PA clearing account will offset the original cost charged to the company for those MIS costs.

          Dina
          • 2. Re: How to offset clearing account in project accounting?
            user8405151
            Hi Dina/Experts,

            I would like to know the Accounting that takes place while Capital project is setup to collect costs as follows:

            Supplier Cost for Architectural drawings: $2,000.00
            Supplier Invoice for building Contractor: $5,000.00
            Supplier Invoice for building Permit Penalty: $ 100.00
            ----------------
            $7,100.00
            Employee Labor project Management: $1,400.00
            Employee Expense Report for Misc. Costs: $ 800.00
            Cost for Usgae of Company Car: $ 150.00
            ---------------
            TOTAL COSTS FOR PROJECT X $9,450.00
            =======
            What is the Accounting in AP for the Capital Project? What is the Accounting that would take place once the Costs are interfaced to Projects fom AP?
            What is the Accounting that takes place when you generate Asset Lines if at all?
            What is the accounting that takes place once the Project Cost are Interfaced to Fixed Assets?

            Thanks,

            Arun
            • 3. Re: How to offset clearing account in project accounting?
              Dina Rotem
              Hi

              Supplier Invoices for a capital project should debit a CIP account.
              AP is sending the charges to GL. the cost are transfered from AP to Projetcs, as accounted.

              Employees time and expenses on a capital project should debit a CIP account. Projects is sending the debit and credit to GL.

              When you generate asset lines in Projects, no accounting takes place. When you transfer assets from Projects to FA, no accounting would be generated, either.

              Only when you create accounting in FA, and transfer to GL, you will see fixed assets account debited (based on asset category accounts), and CIP account (originally generated by AP and PA) is creadited.


              Dina