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Gomathi Vallinayaki

Gomathi Vallinayaki

CA Inter

22K+

17-Aug-20 15:56

20

AS 7

What is meant by Retentions?

Answers (1)

Madhuri Veluri

Madhuri Veluri

Moderator

18-Aug-20 13:08

Contract revenue shall include initial amount agreed on the contract, retention money, claims, incentive payments and variations, if any. Retentions are amounts of progress billings which are not paid until the satisfaction of conditions specified in the contract for the payment of such amounts or until defects have been rectified. Progress billings are amounts billed for work performed on a contract whether or not they have been paid by the customer. Once the conditions are satisfied and defects are rectified (if any), the retention amount is paid off.