Building own House - Construction Company

[mango]

Morning all,

I have a quick question as i'm not to sure about this...

We are a construction company that builds houses, so all cost are on the COS and all revenues as Income (income statement).

We decided to build our "own home" as we will rent that house out going forward...we will not sell this!

My question is, how to I record these materials that goes into this project. I was thinking of allocating everything to a "Work in progress account" and when we are done journal this out to buildings @ cost...

Is this the right way of doing it or am I missing something? We obviously have appliances etc going into this house / project aswell.

[Andromeda]

That is absolutely correct, as regards the building. If it is going to be rented out, it is classed as Investment Property.

The appliances should probably be capitalised as appliances and depreciated, otherwise (if capitalised along with the property) you will have to consider annual impairment write offs.