What Is Work in Progress (WIP) in New Zealand? Definition, Examples & Accounting

Work in progress (WIP) in New Zealand refers to goods or projects that are partially completed but not yet ready for sale or invoicing. It is common in the construction, manufacturing, and service industries, particularly in those with long-term contracts.

WIP is recorded as an asset on the balance sheet and must be valued carefully under NZ IFRS to reflect costs incurred and expected revenue. Mismanagement of WIP can distort profitability and affect IRD compliance.

💬 “Tracking WIP helped us improve billing accuracy and avoid overstating profits.” — NZ Construction Manager

👉 Need help managing WIP reporting in your business? [Talk to our accounting team today →]

Examples of Work in Progress in NZ

• Construction projects still underway
  
• Manufacturing goods partially completed
  
• Legal or consulting services not fully billed
  
• Software development contracts in progress
  
• Long-term projects with staged milestones
  

How WIP Is Recorded

Step	Accounting Treatment	Example in NZ Business
Costs Incurred	Record direct costs (labour, materials)	$50,000 spent on construction site
Revenue Recognition	Apply % completion or milestone method	40% of project revenue recognised
Balance Sheet Impact	WIP shown as current asset	Appears under inventory/projects

Why WIP Matters in NZ

• Provides accurate project profitability tracking
  
• Required for NZ IFRS reporting on long-term contracts
  
• Prevents overstating or understating revenue
  
• Helps manage billing and client invoicing
  
• Supports IRD tax compliance for project-based businesses
  

How Our Service Helps

• Calculates WIP under NZ IFRS standards
  
• Tracks project costs vs billings for accuracy
  
• Automates WIP reporting in accounting software
  
• Ensures proper revenue recognition methods
  
• Supports IRD compliance for construction and service firms
  

FAQ:

Q1: Is WIP an asset or expense in NZ accounting?
It is recorded as a current asset until the project is complete or invoiced.

Q2: How is WIP valued in NZ?
Using actual costs incurred plus proportionate profit based on completion.

Q3: Does WIP affect taxable income?
Yes. WIP can increase taxable income if revenue is recognised before billing.

Q4: Which industries in NZ use WIP most?
Construction, manufacturing, legal, consulting, and software development.