Cast iron pipe used to be the standard for interior sanitary lines, prior to the introduction of PVC or … The benefits of cast iron are that it is quieter and does not broadcast the flow of the water or the flushing of the toilets as readily as plastic pipe. What is CIP Accounting. Normally, upon completion, a CIP item is reclassified, and the reclassified asset is capitalized and depreciated. 5) On August 15, 2019, Company ABC finished construction on the building and put it into service. Construction in progress accounting is also a prime target for auditors due to the length of time the account can be left open. Example of accounting for construction in progress Let's look at an example of accounting for construction in progress. Here’s what Company ABC’s journal entries might look like during the construction process: 1) On July 18, 2019, Vendor A delivered materials to the job site and issued an invoice of $200,000: Account Title                                                  Debit               Credit, Construction in progress                             200,000, Accounts Payable                                                                200,000. Definition of CIP (cast iron pipe) in Construction CIP is an abbreviation of cast iron pipe. This website uses cookies to improve your experience while you navigate through the website. A CIP item is not depreciated until the asset is placed in service. But opting out of some of these cookies may have an effect on your browsing experience. These cookies will be stored in your browser only with your consent. All the construction costs associated with building the asset will accumulate under the account until the project is completed and the asset is in service. We also use third-party cookies that help us analyze and understand how you use this website. What does CIP stand for in Engineering? There are many perks to using software, such as automated job costing, better financial tracking, and workers in the office and field having instant access to files like timecards and change orders. Copyright © 2020 eSUB Inc. All Rights Reserved. Once the asset is put into service, the construction in progress account will be credited, and the debit is transferred to property, plant, and equipment. The use of cast iron piping indicates a very quality project and is much more expensive as well as labor intensive than the standard plastic piping. ",, Articles needing additional references from April 2015, All articles needing additional references, Creative Commons Attribution-ShareAlike License, This page was last edited on 18 January 2019, at 05:25. A CIP item is not depreciated until the asset is placed in service. CIP is listed in the World's largest and most authoritative dictionary database of abbreviations and acronyms The Free Dictionary 1) On March 1, 20X9 a Company's Controller approved a project to add a new piece of equipment to the production facility.

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