Construction in Progress CIP
Definition: Asset under construction; not yet depreciated
Scope:NarrowDifficulty:Moderate
Asset under construction; not yet depreciated
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Record construction costs | ||
| Pay $250,000 toward new building. | ||
| Construction in ProgressAsset+ | $250,000 | |
| CashAsset− | $250,000 | |
| Costs accumulated in CIP until project is complete. | ||
| 2. Place asset in service | ||
| Building finished; total cost $750,000. | ||
| BuildingsAsset+ | $750,000 | |
| Construction in ProgressAsset− | $750,000 | |
| CIP reclassified to depreciable asset. Depreciation begins. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Construction in ProgressConstruction in ProgressAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$250,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750,000.00
$500,000.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$250,000.00
$250,000.00
BuildingsBuildingsAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$750,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$750,000.00
DurationLong-Term
External Links
- Construction in progress — Wikipedia