How to Record Construction Retention Payable
Recording the withholding of a portion of a contractor's progress payment until final project completion.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Construction in Progress | Asset | 200,000.00 | - |
| Accounts Payable - Contractor | Liability | - | 180,000.00 |
| Retention Payable | Liability | - | 200,000.00 |
💡 Accountant's Note
REITs typically withhold 5-10% of construction invoices as 'retention' to ensure the contractor completes the punch list and addresses defects before final payout.
Practitioner & Systems Framework
💻 ERP Architecture
Use a specific sub-ledger or retention code in the accounts payable module to track these amounts separately from standard trade payables.
⚠️ Audit Flags
Review of aging for retention payables and comparison to construction completion certificates.
📄 Required Documentation
Construction contract, progress billing (G702/G703), and architect certification.
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Discussion & Community Questions
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