Capital Work in Progress (CWIP): Accounting, Capitalisation & Schedule III Ageing
When to capitalise, which costs to include, and how to produce the CWIP ageing disclosure under Schedule III that auditors now demand.
Capital work in progress (CWIP) holds the cost of assets still under construction or installation — projects that aren't yet ready for use. Because these balances can sit for months or years, and because Schedule III now requires an ageing disclosure, CWIP has become an audit focus area.
Which costs belong in CWIP
Under Ind AS 16 / AS 10, you capitalise costs directly attributable to bringing the asset to working condition — purchase price, site preparation, installation, professional fees, and eligible borrowing costs. Costs that aren't directly attributable — general overheads, training, pre-operative admin — go to the P&L, not the asset.
Capitalisation and allocation
- Capitalise when the asset is ready for its intended use — not when it's first invoiced.
- A single project often creates several assets; the accumulated cost is allocated across them by direct assignment, pro-rata by value, or manual weights.
- From that point, depreciation begins — so the capitalisation date directly affects the year's depreciation charge.
AssetOS tracks each project with budget and target dates, separates capitalisable spend from P&L items, and generates CWIP ageing (Schedule III), ageing detail, movement and a capitalisation register automatically.