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Why in abnormal gain it is treated as 100% complete in all cost elements irrespective of percentage completion and in abnormal loss it is treated as per percentage completion ? Plzz reply
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Best Answer
Abnormal gain is basically something ( a product/unit ) which you considered to be a normal loss in the beginning but turned out to be a completed unit without any loss . It becomes a abnormal gain when it's a completed unit. That's why we take it as 100%(complete). Whereas in the case of abnormal loss .. it's expected to be a completed unit but it turnd out to be a incomplete unit (because of inefficiency) . That's why we take it as a given percentage ( i.e the percentage of work completed) I hope you understood :)