IFRIC Interpretation 15 Agreements for the Construction of Real Estate IFRIC 15 Agreements for the Construction of Real Estate was developed by the International Financial Reporting Interpretations Committee and issued by the International Accounting Standards Board in July 2008. Its effective date is 1 January 2009. IFRIC Interpretation 15 Agreements for the Construction of Real Estate ( IFRIC 15 ) is set out in paragraphs 1 – 25 . IFRIC 15 is accompanied by an information note , illustrative examples and a Basis for Conclusions . The scope and authority of Interpretations are set out in paragraphs 2 and 7 – 16 of the Preface to International Financial Reporting Standards . IFRIC Interpretation 15 Agreements for the Construction of Real Estate References • IAS 1 Presentation of Financial Statements (as revised in 2007) • IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors • IAS 11 Construction Contracts • IAS 18 Revenue • IAS 37 Provisions, Contingent Liabilities and Contingent Assets • IFRIC 12 Service Concession Arrangements • IFRIC 13 Customer Loyalty Programmes Background 1 In the real estate industry, entities that undertake the construction of real estate, directly or through subcontractors, may enter into agreements with one or more buyers before construction is complete. Such agreements take diverse forms. 2 For example, entities that undertake the construction of residential real estate may start to market individual units (apartments or houses) 'off plan', ie while construction is still in progress, or even before it has begun. Each buyer enters into an agreement with the entity to acquire a specified unit when it is ready for occupation. Typically, the buyer pays a deposit to the entity that is refundable only if the entity fails to deliver the completed unit in accordance with the contracted terms. The balance of the purchase price is generally paid to the entity only on contractual completion, when the buyer obtains possession of the unit. 3 Entities that undertake the construction of commercial or industrial real estate may enter into an agreement with a single buyer. The buyer may be required to make progress payments between the time of the initial agreement and contractual completion. Construction may take place on land the buyer owns or leases before construction begins.
Scope 4 This Interpretation applies to the accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors.
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