5 Agreements in the scope of this Interpretation are agreements for the

5 agreements in the scope of this interpretation are

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undertake the construction of real estate directly or through subcontractors. 5     Agreements in the scope of this Interpretation are agreements for the construction of real estate. In  addition to the construction of real estate, such agreements may include the delivery of other  goods or services. Issues 6     The Interpretation addresses two issues: (a)     Is the agreement within the scope of  IAS 11  or IAS 18? (b)     When should revenue from the construction of real estate be recognised? Consensus 7     The following discussion assumes that the entity has previously analysed the agreement for the  construction of real estate and any related agreements and concluded that it will retain neither  continuing managerial involvement to the degree usually associated with ownership nor effective  control over the constructed real estate to an extent that would preclude recognition of some or all  of the consideration as revenue. If recognition of some of the consideration as revenue is  precluded, the following discussion applies only to the part of the agreement for which revenue will  be recognised. 8     Within a single agreement, an entity may contract to deliver goods or services in addition to the  construction of real estate (eg a sale of land or provision of property management services). In  accordance with  paragraph 13  of IAS 18, such an agreement may need to be split into separately  identifiable components including one for the construction of real estate. The fair value of the total  consideration received or receivable for the agreement shall be allocated to each component. If  separate components are identified, the entity applies  paragraphs 10 - 12  of this Interpretation to the  component for the construction of real estate in order to determine whether that component is  within the scope of  IAS 11  or  IAS 18 . The segmenting criteria of  IAS 11  then apply to any  component of the agreement that is determined to be a construction contract. 9     The following discussion refers to an agreement for the construction of real estate but it also applies  to a component for the construction of real estate identified within an agreement that includes other  components. Determining whether the agreement is within the scope of IAS 11 or IAS 18 10     Determining whether an agreement for the construction of real estate is within the scope of  IAS 11   or  IAS 18  depends on the terms of the agreement and all the surrounding facts and  circumstances. Such a determination requires judgement with respect to each agreement.
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