USA WIP - Labor

A

AcctMgr

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Hi All... I inherited accounting for a C corp and there is approx $900k in WIP Labor that was apparently never allocated to the new homes as they were constructed. Unfortunately, all homes have sold except 3 of them. What are the options for cleaning this up?
Thanks!
 
StanleyR1

StanleyR1

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Determine what the current WIP Labor balance should be and book the rest to the appropriate construction labor accounts and projects. Profit from the sale of homes has been overstated for as long as this account has been neglected, so if it goes back more than one year, you'll either take the hit in the current year or restate prior year financials.

How significant is the error and how far back does it go?
 
A

AcctMgr

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It goes back a few years. Looks like we'll take the hit this year. There are 3 remaining homes that will be sold this year.
 
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