AC2101 S1 2014 Seminar 19 Revenue.pptx

Rendering of services not required to acquire supply

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Unformatted text preview: Construction of Real Estate Accompanying Note 11 INT FRS 115 *  Effective for annual periods beginning on or after 1 Jan 2011 *  Adoption is a change in accounting policy à༎ accounted for retrospectively (FRS 8) 12 6 INT FRS 115 §༊  Scope *  Accounting by real estate developers §༊  Address 2 issues a.  Is the agreement (for construction of real estate) within FRS 11 or FRS 18? b.  When should revenue be recognized? 13 INT FRS 115 §༊  FRS 11 vs. FRS 18 & Revenue recognition method Ø།  Depends on agreement terms & surrounding facts and circumstances à༎ Judgment Ø།  FRS 11 if v༇  Meet the definition of construction contract – “a contract specifically negotiated for the construction of an asset or a combination of assets” à༎ buyer able to specify major structural elements of design before construction begins &/or specify major structural changes during construction v༇  Percentage of completion (POC) method 14 7 INT FRS 115 Ø། FRS 18 a.  Rendering of services Ø།  Not required to acquire & supply construction materials Ø།  Satisfied FRS18:20 à༎ Percentage of completion method (POC) 15 INT FRS 115 a.  Sale of goods Ø།  Required to provide services & construction materials Ø།  Buyers have only...
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