International Financial Reporting. Construction Contracts IAS 11

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "International Financial Reporting. Construction Contracts IAS 11"

Transcription

1 Construction Contracts IAS 11

2 2 Construction contract definition Construction Contract is a contract specifically negotiated for the construction of an asset (a building, a bridge) or a combination of assets (a complex of plant) that are closely interrelated o interdependent in terms of - design, - technology and function or - their ultimate purpose or use.

3 3 Construction contracts include: 1) Contracts for the rendering of services that are directly related to the construction of assets (e.g. contracts for the services of project manager and architects); 2) Contracts for the destruction or restoration of assets and for the restoration of the environment after the demolition of assets.

4 4 Construction contracts are not included in IAS 2 (inventory) for two reasons: 1) They are often long-term, so they don t end in one accounting period; 2) The profit arising on a CC would not be recognized every accounting period, but only at the end of the contract (it could be after several years).

5 5 Project Phases Pre-Project Planning Business Plan Product Technical Plan Facility Scope Plan Project Execution Plan Contract Strategy Design - Finalize Scope - Detailed Cost Estimate - Detailed Schedule - Detailed Design - Prepare Work Packages

6 6 Project Phases Materials Management Bulk Commodities Fabricated Items Standard Engineered Equipment Specialized Engineered Equipment Field Management Services (GC/Subcontractors) Documentation Field Equipment Management Start-Up - Start-Up Plan - Commissioning - Project Close-Out Construction - Prework - Execution - Demobilization

7 7 Industry Segments Residential Commercial Highway/ Heavy Industrial Private Personal Homes Private Estates Subdivision Developments Office Building Industrial Park Hotel/Motel Hospital & Institutional Railroad Private Utilities/Communications Power Plants Refineries Paper Processing Plants Chemical Processing Plants Other Manufacturing Facilities Public Subsidized housing Public Schools Military Facilities Water Works Bridges and Roads Conservation & Development Publicly Funded Manufacturing (Military)

8 8 Combining and segmenting Construction Contracts 1) a group of contracts should be treated as a single contract when: a) the group of contracts is negotiated as a single package; b) the contracts are so closely related that they are, in effect, a single project; c) the contracts are performed concurrently or in a continuous sequence. 2) a single contract which covers the construction of a number of assets should be treated as several separate contracts (one for each asset) when: a) separate proposals have been submitted for each asset; b) each asset has been subject to separate negotiation; c) the costs and revenues for each asset can be separately identified.

9 9 Contract revenues and costs The total revenues and costs should be estimated, and these estimates may need to be revised periodically. Contract revenue comprises: 1) the initial amount of revenue agreed in the contract; 2) plus or minus the revenue associated with agreed variations in the contract work; 3) plus amounts claimed by the contractor as reimbursement for costs not included in the contract price; 4) plus incentive payments to which the contractor is entitled for meeting or exceeding specified performance targets; 5) minus penalties arising from delays or other problems caused by the contractor. Amounts should be included in contract revenue only if is probable that the revenue will arise and if the amount concerned can be measured reliably.

10 Fixed price contracts Types of contracts agreed fixed contract price, or a fixed rate per unit of output (plus escalation clauses) Cost plus contracts contractor reimbursed for defined costs, plus a percentage of these costs or a fixed fee Combination e.g. cost plus contract with maximum price 10

11 11 Contract costs comprise: Contract revenues and costs 1) costs that relate directly to the specific contract (e.g. materials, labour, plant used in the construction work); 2) costs that relate to contract activity in general and can be allocated to the contract (e.g. insurance); 3) other costs which are specifically chargeable to the customer under the terms of the contract (e.g. general administration costs or R&D costs for which reimbursement is specified in the term of the contract). Costs that relate to contract activity in general should be allocated using methods which are systematic, rational and consistent.

12 Contract costs include Direct costs labor & materials PP&E depreciation moving & hiring plant design rectification and warranty claims Indirect costs insurance indirect design construction overheads [borrowing costs] Costs specifically chargeable reimbursed design, general administration cost 12

13 Contract costs... Following costs are excluded general administration (unless reimbursed) selling costs research & development (unless reimbursed) depreciation of idle plant & equipment Cost cut-off from date of securing contract to completion of contract pre-contract costs? 13

14 14 Recognition of contract revenue and expenses IAS 11, par. 22 requires that: When the outcome of a CC can be estimated reliably, contract revenue and contract costs associated with the CC shall be recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period. The stage of completion may be determined in a number of ways. For example: 1) by comparing the costs incurred for the work performed to date with the estimated total contract costs; 2) by carrying out a survey of the work performed to date; 3) by considering the physical proportion of the contract work completed

15 15 IAS 11 Example A company which prepares accounts to 31 December each year began work on a construction on 17 february The contract price was originally agreed to be 19 million but during 2010 the costumer requested a substantial variation to the contract work and this increased the prices to 25 million. The contract was completed on 2 may Cost information is as follows: 31/12/09 31/12/10 31/12/11 Expected total costs Total costs incurred to date Costs relating to future activity 1 - -

16 16 IAS 11 Example The costs incurred to date of 5 million at 31 December 2009 included 1 million spent on acquiring materials for use during future work on the contract. The company s accounting policy in relation to construction contracts is to determine the stage of completion by comparing the costs incurred to date with the estimated total contract costs. Calculate the revenue and expenses arising from this contract which should be recognized in the statement of comprehensive income for each of the years to 31 December 2009, 2010, 2011.

17 17 IAS 11 example (solution) a) At December 2009 Contract revenue (25% x 19m) Cumulative total Recognized in prior years Recognized this year 4,75-4,75 Contract expenses 4,00-4,00 Contract profit 0,75-0,75

18 18 IAS 11 example (solution) b) At December 2010 Contract revenue (70% x 25m) Cumulative total Recognized in prior years Recognized this year 17,50 4,75 12,75 Contract expenses 14,00 4,00 10,00 Contract profit 3,50 0,75 2,75

19 19 IAS 11 example (solution) c) At December 2011 Contract revenue (100% x 25m) Cumulative total Recognized in prior years Recognized this year 25,00 17,50 7,50 Contract expenses 21,00 14,00 7,00 Contract profit 4,00 3,50 0,50

20 20 Recognition of contract revenue and expenses IAS 11, par. 32 requires that: When the outcome of a CC cannot be estimated reliably: 1) revenue shall be recognized only to the extent of contract costs incurred that it is probable will be recoverable; 2) Contract costs shall be recognized as an expense in the period in which they are incurred.

21 Recognition of revenue total contract revenue costs to complete stage of completion Can be measured reliably AND Flow of economic benefits is probable? YES OUTCOME RELIABLE OUTCOME NOT RELIABLE Percentage of Completion method Costs charged to income to be applied Revenue = recoverable costs 21 NO

22 22 Recognition of expected losses IAS 11, par. 36 requires that: When it probable that total contract costs will exceed total contract revenue, the expected loss shall be recognized as an expense immediately. The amount of such a loss is determined irrespective of: whether work has commenced on the contract; the stage of completion of contract activity; the account of profit expected to arise on other contracts which are not treated as a single construction contract.

23 Changes in estimates Revenue is based on current estimates of contract revenues and costs Effect recognized in income statement for current and subsequent periods (IAS 8) 23

24 Recognition in balance sheet Costs incurred to date Add: recognized profits Less: recognized losses X Progress billings Amount due from/(to) customer X X X X X (X) 24

25 25 An entity shall disclose: Disclosures (a) the amount of contract revenue recognized as revenue in the period; (b) the methods used to determine the contract revenue recognized in the period; (c) the methods used to determine the stage of completion of contracts in progress; (d) For contracts in progress at the end of the reporting period: 1) the total of costs incurred to date and total recognized profit/losses to date; 2) the amount of any advances received; advances are amounts received by the contractor before the related work is performed; 3) the amount of any retentions ; retentions are amounts that have been billed to the customer but which are not payable until certain conditions specified in the contract have been satisfied.

26 26 Disclosures An entity shall present: (a) the gross amount due from customers for contract work as an asset; (b) the gross amount due to customers for contract work as a liability. The gross amount due from customers for contract work is equal to: 1) costs incurred to date plus recognized profits; 2) less amounts billed to date (progress billings) and any recognized losses for all contracts in progress at the end of the reporting period for which costs incurred to date plus recognized profits less recognized losses exceed progress billings.

27 27 Disclosures The gross amount due to customers for contract work is equal to: 1) progress billings plus any recognized losses; 2) less costs incurred to date and recognized profits for all contracts in progress at the end of the reporting period for which progress billings exceed costs incurred to date plus recognized profits less recognized losses.

International Accounting Standard 11 Construction Contracts

International Accounting Standard 11 Construction Contracts International Accounting Standard 11 Construction Contracts Objective The objective of this Standard is to prescribe the accounting treatment of revenue and costs associated with construction contracts.

More information

Sri Lanka Accounting Standard -LKAS 11. Construction Contracts

Sri Lanka Accounting Standard -LKAS 11. Construction Contracts Sri Lanka Accounting Standard -LKAS 11 Construction Contracts -405- Sri Lanka Accounting Standard -LKAS 11 Construction Contracts Sri Lanka Accounting Standard LKAS 11 Construction Contracts is set out

More information

Construction Contracts

Construction Contracts STATUTORY BOARD FINANCIAL REPORTING STANDARD SB-FRS 11 Construction Contracts This version of SB-FRS 11 does not include amendments that are effective for annual periods beginning after 1 January 2015.

More information

NEPAL ACCOUNTING STANDARDS ON CONSTRUCTION CONTRACTS

NEPAL ACCOUNTING STANDARDS ON CONSTRUCTION CONTRACTS NAS 13 NEPAL ACCOUNTING STANDARDS ON CONSTRUCTION CONTRACTS CONTENTS Paragraphs OBJECTIVE SCOPE 1 2 DEFINITIONS 3 6 COMBINING AND SEGMENTING CONSTRUCTION CONTRACTS 7 10 CONTRACT REVENUE 11 15 CONTRACT

More information

The following Accounting Standards Interpretation (ASI) relates to AS 7. ASI 29 Turnover in case of Contractors

The following Accounting Standards Interpretation (ASI) relates to AS 7. ASI 29 Turnover in case of Contractors 108 Accounting Standard (AS) 7 (revised 2002) Construction Contracts Contents OBJECTIVE SCOPE Paragraph 1 DEFINITIONS 2-5 COMBINING AND SEGMENTING CONSTRUCTION CONTRACTS 6-9 CONTRACT REVENUE 10-14 CONTRACT

More information

Construction Contracts

Construction Contracts 65 Accounting Standard (AS) 7 Construction Contracts Contents OBJECTIVE SCOPE Paragraph 1 DEFINITIONS 2-5 COMBINING AND SEGMENTING CONSTRUCTION CONTRACTS 6-9 CONTRACT REVENUE 10-14 CONTRACT COSTS 15-20

More information

Construction Contracts

Construction Contracts HKAS 11 Issued October 2004Revised March 2010 Hong Kong Accounting Standard 11 Construction Contracts COPYRIGHT Copyright 2011 Hong Kong Institute of Certified Public Accountants This Hong Kong Financial

More information

Applicability / Objective

Applicability / Objective By Rakesh Agarwal Applicability / Objective APPLICABILITY: applicable to all contracts entered into on or after 1-4-2003 and is mandatory in nature from that date. Based on AS 7 (Construction Contracts)

More information

Construction Contracts

Construction Contracts Compiled Accounting Standard AASB 111 Construction Contracts This compiled Standard applies to annual reporting periods beginning on or after 1 January 2009 that end on or after 30 June 2009. Early application

More information

1 Supplement: IAS 11 Construction contracts

1 Supplement: IAS 11 Construction contracts 1 Supplement: IAS 11 Construction contracts Introduction In this section we introduce construction contracts. We will look at the required treatments and disclosures under IAS 11. Make sure that you work

More information

New Zealand Equivalent to International Accounting Standard 11 Construction Contracts (NZ IAS 11)

New Zealand Equivalent to International Accounting Standard 11 Construction Contracts (NZ IAS 11) New Zealand Equivalent to International Accounting Standard 11 Construction Contracts (NZ IAS 11) Issued November 2004 and incorporates amendments up to November 2008 This Standard was issued by the Financial

More information

GOVERNMENT OF MALAYSIA

GOVERNMENT OF MALAYSIA GOVERNMENT OF MALAYSIA Malaysian Public Sector Accounting Standards MPSAS 11 Construction Contracts March 2015 MPSAS 11 Construction Contracts Acknowledgment The Malaysian Public Sector Accounting Standard

More information

ACCOUNTING FOR CONSTRUCTION CONTRACT AS7 (Revised-2002) Applied in accounting for construction contracts in the financial statements of contractors.

ACCOUNTING FOR CONSTRUCTION CONTRACT AS7 (Revised-2002) Applied in accounting for construction contracts in the financial statements of contractors. ACCOUNTING FOR CONSTRUCTION CONTRACT AS7 (Revised-2002) 1) Applicability of the Standard Applied in accounting for construction contracts in the financial statements of contractors. Where a Construction

More information

Construction Contracts

Construction Contracts Contents Indian Accounting Standard (Ind AS) 11 Construction Contracts Paragraphs OBJECTIVE SCOPE 1 2 DEFINITIONS 3 6 COMBINING AND SEGMENTING CONSTRUCTION CONTRACTS 7 10 CONTRACT REVENUE 11 15 CONTRACT

More information

19.2 Applicable Terms

19.2 Applicable Terms 19.0 ACCOUNTING FOR CONSTRUCTION CONTRACTS 19.1 Introduction This chapter covers the following: a. Applicable Terms b. Applicable Standard c. Key IPSAS Provisions d. Accounting Documentation e. Accounting

More information

International Accounting Standards

International Accounting Standards International Accounting Standards The Key Issues in IAS 2 and 11 Background In this second of my series on international accounting standards, I have chosen to look at the two standards covering the topic

More information

23 Construction contracts/ Long term WIP IAS 11

23 Construction contracts/ Long term WIP IAS 11 23 Construction contracts/ Long term WIP IAS 11 A Key points Construction contract assets are often material amounts in balance sheets. Changes in valuation of work in progress (WIP) have a direct profit

More information

DRAFT INCOME COMPUTATION AND DISCLOSURE STANDARDS [ICDS]

DRAFT INCOME COMPUTATION AND DISCLOSURE STANDARDS [ICDS] DRAFT INCOME COMPUTATION AND DISCLOSURE STANDARDS [ICDS] Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes January 2015 Income Computation and Disclosure Standard

More information

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART-II, SECTION 3, SUB-SECTION (ii)]

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART-II, SECTION 3, SUB-SECTION (ii)] [TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART-II, SECTION 3, SUB-SECTION (ii)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION

More information

ACCOUNTING FOR CONSTRUCTION IN PROGRESS

ACCOUNTING FOR CONSTRUCTION IN PROGRESS ATTACHMENT X GOVERNMENT REGULATION OF THE REPUBLIC OF INDONESIA NUMBER YEAR 00 DATE JUNE 00 GOVERNMENT ACCOUNTING STANDARDS STATEMENT NO.0 ACCOUNTING FOR CONSTRUCTION IN PROGRESS TABLE OF CONTENTS Paragraph

More information

Impacts on the construction industry of the new revenue standard

Impacts on the construction industry of the new revenue standard IFRS Impacts on the construction industry of the new revenue standard September 2014 kpmg.com/ifrs Contents The devil is in the detail 1 1 Critical judgements at contract inception 2 1.1 Pre-contract costs

More information

CONCEPTUAL AND ACCOUNTING ASPECTS RELATING CONSTRUCTION CONTRACTS IN PUBLIC ENTITIES

CONCEPTUAL AND ACCOUNTING ASPECTS RELATING CONSTRUCTION CONTRACTS IN PUBLIC ENTITIES CONCEPTUAL AND ACCOUNTING ASPECTS RELATING CONSTRUCTION CONTRACTS IN PUBLIC ENTITIES Ţenovici Cristina Otilia Ph D Lecturer Constantin Brâncoveanu University, Piteşti, F.M.M.A.E. Rm. Vâlcea cristina.tenovici@gmail.com

More information

International Accounting Standard 17 Leases

International Accounting Standard 17 Leases International Accounting Standard 17 Leases Objective 1 The objective of this Standard is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosure to apply in relation

More information

New aspects of revenues and expenses accounting for construction contracts

New aspects of revenues and expenses accounting for construction contracts New aspects of revenues and expenses accounting for construction contracts Lilia Grigoroi The Academy of Economics Studies of Moldova, Accounting and Audit Department email: lilia@grigoroi.com Angela Popovici

More information

International Accounting Standard 2 Inventories

International Accounting Standard 2 Inventories International Accounting Standard 2 Inventories Objective 1 The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the

More information

DISCUSSION PAPER TAX IMPLICATIONS RELATED TO THE IMPLEMENTATION OF FRS 111: CONSTRUCTION CONTRACTS

DISCUSSION PAPER TAX IMPLICATIONS RELATED TO THE IMPLEMENTATION OF FRS 111: CONSTRUCTION CONTRACTS The Malaysian Institute of Certified Public Accountants DISCUSSION PAPER TAX IMPLICATIONS RELATED TO THE IMPLEMENTATION OF FRS 111: CONSTRUCTION CONTRACTS Prepared by: Joint Tax Working Group on FRS Date

More information

Revenue from contracts with customers The standard is final A comprehensive look at the new revenue model

Revenue from contracts with customers The standard is final A comprehensive look at the new revenue model Revenue from contracts with customers The standard is final A comprehensive look at the new revenue model No. US2014-01 (supplement) June 11, 2014 What s inside: Overview... 1 Defining the contract...

More information

(b) financial instruments (Ind AS 32, Financial Instruments: Presentation and Ind AS 109, Financial Instruments and ); and

(b) financial instruments (Ind AS 32, Financial Instruments: Presentation and Ind AS 109, Financial Instruments and ); and Indian Accounting Standard (Ind AS) 2 Inventories (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold italic type indicate

More information

Indian Accounting Standard (Ind AS) 2 Inventories. Cost of agricultural produce harvested from biological assets 20

Indian Accounting Standard (Ind AS) 2 Inventories. Cost of agricultural produce harvested from biological assets 20 Contents OBJECTIVE Indian Accounting Standard (Ind AS) 2 Inventories Paragraphs 1 SCOPE 2-5 DEFINITIONS 6-8 MEASUREMENT OF INVENTORIES Cost of inventories 10-22 Costs of purchase Costs of conversion Other

More information

Sri Lanka Accounting Standard LKAS 17. Leases

Sri Lanka Accounting Standard LKAS 17. Leases Sri Lanka Accounting Standard LKAS 17 Leases CONTENTS SRI LANKA ACCOUNTING STANDARD LKAS 17 LEASES paragraphs OBJECTIVE 1 SCOPE 2 3 DEFINITIONS 4 6 CLASSIFICATION OF LEASES 7 19 LEASES IN THE FINANCIAL

More information

CHAPTER 11 U.S. GAAP AND INTERNATIONAL ACCOUNTING STANDARDS

CHAPTER 11 U.S. GAAP AND INTERNATIONAL ACCOUNTING STANDARDS CHAPTER 11 U.S. GAAP AND INTERNATIONAL ACCOUNTING STANDARDS CONTENTS Introduction 11.02 Accounting Sources for Construction Contractors 11.03 U.S. GAAP 11.03 IFRS 11.04 Problems with U.S. GAAP for Contractors

More information

INLAND REVENUE BOARD MALAYSIA CONSTRUCTION CONTRACTS

INLAND REVENUE BOARD MALAYSIA CONSTRUCTION CONTRACTS INLAND REVENUE BOARD MALAYSIA CONSTRUCTION CONTRACTS PUBLIC RULING NO. 2/2009 Translation from the original Bahasa Malaysia text DATE OF ISSUE : 22 MAY 2009 CONSTRUCTION CONTRACTS INLAND REVENUE BOARD

More information

NEPAL ACCOUNTING STANDARDS ON INVENTORIES CONTENTS Paragraphs

NEPAL ACCOUNTING STANDARDS ON INVENTORIES CONTENTS Paragraphs NAS 04 NEPAL ACCOUNTING STANDARDS ON INVENTORIES CONTENTS Paragraphs OBJECTIVE 1 SCOPE 2 5 DEFINITIONS 6 8 MEASUREMENT OF INVENTORIES 9-32 Cost of inventories 10-21 Costs of purchase 11 Costs of conversion

More information

BASIC CONCEPTS AND FORMULAE

BASIC CONCEPTS AND FORMULAE 7 Contract Costing BASIC CONCEPTS AND FORMULAE Basic Concepts 1. Contract costing:- Contract or terminal costing, as it is termed, is one form of application of the principles of job costing. In fact a

More information

IAS - 17. Leases. By: http://www.worldgaapinfo.com

IAS - 17. Leases. By: http://www.worldgaapinfo.com IAS - 17 Leases International Accounting Standard No 17 (IAS 17) Leases This revised standard replaces IAS 17 (revised 1997) Leases, and will apply for annual periods beginning on or after January 1, 2005.

More information

Accounting for Real Estate Developers. Presented by: CA. Sandeep Shah Partner N A Shah Associates

Accounting for Real Estate Developers. Presented by: CA. Sandeep Shah Partner N A Shah Associates Accounting for Real Estate Developers Presented by: CA. Sandeep Shah Partner N A Shah Associates 1 Contents Background Accounting under Indian GAAP Accounting under IFRS Exposure draft-revenue from Contracts

More information

TREASURER S DIRECTIONS ACCOUNTING ASSETS Section A2.11 : Construction (Work in Progress)

TREASURER S DIRECTIONS ACCOUNTING ASSETS Section A2.11 : Construction (Work in Progress) TREASURER S DIRECTIONS ACCOUNTING ASSETS Section A2.11 : Construction (Work in Progress) STATEMENT OF INTENT Costs associated with the construction or development of an asset can be significant and should

More information

POLICY MANUAL. Financial Management Significant Accounting Policies (July 2015)

POLICY MANUAL. Financial Management Significant Accounting Policies (July 2015) POLICY 1. Objective To adopt Full Accrual Accounting and all other applicable Accounting Standards. 2. Local Government Reference Local Government Act 1995 Local Government (Financial Management) Regulations

More information

7 Contract Costing. Basic Concepts. Contract Costing

7 Contract Costing. Basic Concepts. Contract Costing 7 Contract Costing Basic Concepts Contract Costing Sub-contract Extra work Work Certified Value of Work Certified Cost of work certified Work uncertified Progress Payment Contract costing is a form of

More information

technical factsheet 185 Stock and work in progress

technical factsheet 185 Stock and work in progress technical factsheet 185 Stock and work in progress CONTENTS Page 1 Introduction 1 2 Legislative requirement 1 3 Accounting standards 3 4 Examples 6 5 Checklist 7 6 Sources of information 9 This technical

More information

CLASSIFICATION OF LEASES

CLASSIFICATION OF LEASES 284 Accounting Standard (AS) 19 Leases Contents OBJECTIVE SCOPE Paragraphs 1-2 DEFINITIONS 3-4 CLASSIFICATION OF LEASES 5-10 LEASES IN THE FINANCIAL STATEMENTS OF LESSEES 11-25 Finance Leases 11-22 Operating

More information

IFRS 15: an overview of the new principles of revenue recognition

IFRS 15: an overview of the new principles of revenue recognition IFRS 15: an overview of the new principles of revenue recognition December 2014 I n May 2014, the IASB published IFRS 15, Revenue from Contracts with Customers. Simultaneously, the FASB published ASU 2014-09

More information

Revenue Recognition - Construction Contract & Real Estate Developers

Revenue Recognition - Construction Contract & Real Estate Developers Revenue Recognition - Construction Contract & Real Estate Developers by: Pramodh Venkatraman, Pramodh Venkatraman, Article Assistant Guided by: Mr DK Giridharan, Executive Partner Mr S Sundarrajan, Executive

More information

Valuation of Inventories

Valuation of Inventories 8 Accounting Standard (AS) 2 Valuation of Inventories Contents OBJECTIVE SCOPE Paragraphs 1-2 DEFINITIONS 3-4 MEASUREMENT OF INVENTORIES 5-25 Cost of Inventories 6-13 Costs of Purchase 7 Costs of Conversion

More information

I. GENERAL PROVISIONS II. KEY DEFINITIONS

I. GENERAL PROVISIONS II. KEY DEFINITIONS APPROVED by Resolution No. 1 of 18 December 2003 of the Standards Board of the Public Establishment the Institute of Accounting of the Republic of Lithuania (Revised version of Order No. VAS-5 of 29 June

More information

IFRS 15 Revenue from Contracts with Customers

IFRS 15 Revenue from Contracts with Customers S U M M A R Y IFRS 15 Revenue from Contracts with Customers Overview IFRS 15 Revenue from Contracts with Customers was issued on 28 May 2014. It supersedes: IAS 18 Revenue; IAS 11 Construction contracts;

More information

Muhammad Asif Iqbal Technical Advisor, SOCPA. March 7, 2012

Muhammad Asif Iqbal Technical Advisor, SOCPA. March 7, 2012 Saudi Accounting Framework in comparison with Framework Muhammad Asif Iqbal Technical Advisor, SOCPA ICAP KSA Chapter, Khobar March 7, 2012 Agenda Status of Accounting Standards in Saudi Arabia SOCPA Convergence

More information

New Revenue Recognition \ Rules Impact Contractors

New Revenue Recognition \ Rules Impact Contractors SUMMARY (CLICK HERE FOR EXECUTIVE SUMMARY) On May 28, 2014, the Financial Accounting Standards Board (FASB) released sweeping new guidance that covers all companies filing under US GAAP. ASU 2014-09, Revenue

More information

New Zealand Equivalent to International Accounting Standard 17 Leases (NZ IAS 17)

New Zealand Equivalent to International Accounting Standard 17 Leases (NZ IAS 17) New Zealand Equivalent to International Accounting Standard 17 Leases (NZ IAS 17) Issued November 2004 and incorporates amendments up to October 2010 This Standard was issued by the Financial Reporting

More information

Statutory Financial Reporting Policy

Statutory Financial Reporting Policy Statutory Financial Reporting Policy Reference Number: 3.15 12/270185 Type: Council Category: Corporate Services Relevant Community Plan Outcome: Demonstrate effective leadership with strong community

More information

Statement of Financial Accounting Standards No. 13

Statement of Financial Accounting Standards No. 13 Statement of Financial Accounting Standards No. 13 FAS13 Status Page FAS13 Summary Accounting for Leases November 1976 Financial Accounting Standards Board of the Financial Accounting Foundation 401 MERRITT

More information

CONTACT(S) Jane Pike jpike@ifrs.org +44 (0)20 7246 6925

CONTACT(S) Jane Pike jpike@ifrs.org +44 (0)20 7246 6925 IASB Agenda ref 9 STAFF PAPER IASB Meeting Project Rate-regulated Activities Paper topic Revenue requirement illustrative example CONTACT(S) Jane Pike jpike@ifrs.org +44 (0)20 7246 6925 July 2015 This

More information

IPSAS 12 INVENTORIES

IPSAS 12 INVENTORIES IPSAS 12 INVENTORIES Acknowledgment This International Public Sector Accounting Standard (IPSAS) is drawn primarily from International Accounting Standard (IAS) 2 (revised 2003), Inventories published

More information

Aerospace & Defense Spotlight The Converged Revenue Recognition Model Has Landed

Aerospace & Defense Spotlight The Converged Revenue Recognition Model Has Landed September 2014 Aerospace & Defense Spotlight The Converged Revenue Recognition Model Has Landed In This Issue: Background Key Accounting Issues Effective Date and Transition Challenges for A&D Entities

More information

Understanding Construction Accounting

Understanding Construction Accounting Understanding Construction Accounting Understanding Construction Accounting David O Brien, CPA, CGMA Member & Director of Construction Team James F. Weber, CPA, CGMA Managing Member This session is eligible

More information

Revenue Recognition under IFRS

Revenue Recognition under IFRS Revenue Recognition under IFRS Beratung Schulung Umstellung IAS 18 Revenue IAS 11 Construction Contracts IFRIC 13 Customer Loyalty Programs AGiG Seminar 8 November 2007 IAS 18: Agenda Basic principles

More information

CASH FLOW STATEMENT (AND FINANCIAL STATEMENT)

CASH FLOW STATEMENT (AND FINANCIAL STATEMENT) CASH FLOW STATEMENT (AND FINANCIAL STATEMENT) - At the most fundamental level, firms do two different things: (i) They generate cash (ii) They spend it. Cash is generated by selling a product, an asset

More information

IAS 17. IAS 17 definition Benefits of leases. Leases

IAS 17. IAS 17 definition Benefits of leases. Leases by Juma Kisaame, 2014 (http://practicalaction.org/microleasing/docs/dfcu.pdf) 2015-04-29 IAS 17 Leases IAS 17 definition Lessor = OWNER of property A lease is an agreement whereby the lessor conveys to

More information

Construction Economics & Finance. Module 6. Lecture-1

Construction Economics & Finance. Module 6. Lecture-1 Construction Economics & Finance Module 6 Lecture-1 Financial management: Financial management involves planning, allocation and control of financial resources of a company. Financial management is essential

More information

INDONESIAN INSTITUTE OF ACCOUNTANTS FIXED ASSETS AND OTHER ASSETS

INDONESIAN INSTITUTE OF ACCOUNTANTS FIXED ASSETS AND OTHER ASSETS STATEMENT OF SFAS No. FINANCIAL ACCOUNTING STANDARD 16 INDONESIAN INSTITUTE OF ACCOUNTANTS FIXED ASSETS AND OTHER ASSETS Statement of Financial Accounting Standard (SFAS) No.16, Fixed Assets and Other

More information

LEASES SCOPE/EXCLUSIONS

LEASES SCOPE/EXCLUSIONS LEASES SCOPE/EXCLUSIONS What is a lease? A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of

More information

Canadian GAAP - IFRS Comparison Series Issue 8 Leases

Canadian GAAP - IFRS Comparison Series Issue 8 Leases - Comparison Series Issue 8 Leases Both and are principle-based frameworks and, from a conceptual standpoint, many of the general principles are the same. However, the application of those general principles

More information

Customer Loyalty Programmes

Customer Loyalty Programmes INTERPRETATION OF STATUTORY BOARD FINANCIAL REPORTING STANDARD INT SB-FRS 113 Customer Loyalty Programmes This version of INT SB-FRS 113 does not include amendments that are effective for annual periods

More information

accounting for property, plant and equipment

accounting for property, plant and equipment 01 technical accounting for property, plant and equipment RELEVANT TO ACCA QUALIFICATION PAPER F7 The accounting for IAS 16, Property, Plant and Equipment is a particularly important area of the Paper

More information

HKAS 17 Revised July 2012February 2014. Hong Kong Accounting Standard 17. Leases

HKAS 17 Revised July 2012February 2014. Hong Kong Accounting Standard 17. Leases HKAS 17 Revised July 2012February 2014 Hong Kong Accounting Standard 17 Leases HKAS 17 COPYRIGHT Copyright 2014 Hong Kong Institute of Certified Public Accountants This Hong Kong Financial Reporting Standard

More information

SIGNIFICANT GROUP ACCOUNTING POLICIES

SIGNIFICANT GROUP ACCOUNTING POLICIES SIGNIFICANT GROUP ACCOUNTING POLICIES Basis of consolidation Subsidiaries Subsidiaries are all entities over which the Group has the sole right to exercise control over the operations and govern the financial

More information

Net cash balances at the year-end were 2.87 million (2014: 2.15 million) and total capital expenditure during the year was 626,000 (2014: 386,000).

Net cash balances at the year-end were 2.87 million (2014: 2.15 million) and total capital expenditure during the year was 626,000 (2014: 386,000). Preliminary Announcement for the year ended 30 September 2015 Chairman s Statement The result for the year to 30 September 2015 is a net Profit before Taxation of 1,869,000 (2014: 1,333,000), on Revenues

More information

Accounting Principles Critical to Success Presented By: C. P. Krishnan. www.cakintl.com

Accounting Principles Critical to Success Presented By: C. P. Krishnan. www.cakintl.com Accounting Principles Critical to Success Presented By: C. P. Krishnan Basic Accounting You Need to Know Assets, Liabilities, Equity, Income, & Expenses Assets Includes what you have and what people owe

More information

ACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS

ACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS Issued 07/85 Revised 06/90 New Zealand Society of Accountants STATEMENT OF STANDARD ACCOUNTING PRACTICE NO. 18 Revised 1990 ACCOUNTING FOR LEASES AND HIRE PURCHASE CONTRACTS Issued by the Council, New

More information

IPSAS 13 - LEASES as adopted by the Maltese Government

IPSAS 13 - LEASES as adopted by the Maltese Government IPS IPSAS 13 - LEASES as adopted by the Maltese Government Issued DD/MM/YY This Standard was issued by the IPSAS Implementation Board pursuant to section X of the X Act 201X IPSAS 13 - LEASES as adopted

More information

Accounting for Fixed Assets

Accounting for Fixed Assets 96 Accounting Standard (AS) 10 Accounting for Fixed Assets Contents INTRODUCTION Paragraphs 1-6 Definitions 6 EXPLANATION 7-17 Identification of Fixed Assets 8 Components of Cost 9 Self-constructed Fixed

More information

Summary of IFRS Exposure Draft Leases

Summary of IFRS Exposure Draft Leases April 2014 The International Accounting Standards Board (IASB) recently issued a revised Exposure Draft (ED) relating to leases. Once these proposals are finalized the new guidance will replace IAS 17

More information

Income Computation and Disclosure Standard V Tangible Fixed Assets

Income Computation and Disclosure Standard V Tangible Fixed Assets CA. Zubin F. Billimoria and CA. Harsha Rawal Income Computation and Disclosure Standard V Tangible Fixed Assets Introduction This Income Computation and Disclosure Standard (ICDS) deals with the treatment

More information

Foreign Currency Translation

Foreign Currency Translation Statement of Accounting Standards Foreign Currency Translation Prepared by the Accounting Standards Board and the Public Sector Accounting Standards Board of the Australian Accounting Research Foundation

More information

IPSAS 13 LEASES Acknowledgment

IPSAS 13 LEASES Acknowledgment IPSAS 13 LEASES Acknowledgment This International Public Sector Accounting Standard is drawn primarily from International Accounting Standard (IAS) 17 (revised 2003), Leases published by the International

More information

AS 10 : Accounting for Fixed Assets

AS 10 : Accounting for Fixed Assets AS 10 : Accounting for Fixed Assets IPCC Paper 1: Accounting Chapter 1 Unit 2 Fixed Assets - AS 10 Related ASI is 2 CA. Yagnesh Desai 1 Applicability This standards was introduced in 1985 It is applicable

More information

FP5 SIGNIFICANT ACCOUNTING POLICIES - BUDGET

FP5 SIGNIFICANT ACCOUNTING POLICIES - BUDGET FP5 SIGNIFICANT ACCOUNTING POLICIES - BUDGET Adopted: Audit Committee 20 June 2013 Committee Decision No. 10 Audit Committee Minutes endorsed by Council OMC 18 July 2013 Council Decision No. 2753 AASB

More information

Compiled Accounting Standard AASB 102

Compiled Accounting Standard AASB 102 Compiled Accounting Standard AASB 102 Inventories This compiled Standard applies to annual reporting periods beginning on or after 1 January 2009 that end on or after 30 June 2009. Early application is

More information

EXPLANATORY NOTES. 1. Summary of accounting policies

EXPLANATORY NOTES. 1. Summary of accounting policies 1. Summary of accounting policies Reporting Entity Taranaki Regional Council is a regional local authority governed by the Local Government Act 2002. The Taranaki Regional Council group (TRC) consists

More information

Leases Learning Objectives. Overview of Leasing. Advantages of Leasing

Leases Learning Objectives. Overview of Leasing. Advantages of Leasing Leases Learning Objectives 1. Describe the characteristics and advantages of leases 2. Operating leases vs Captial leases 3. Determine rental payments 4. Account for operating leases - lessee 5. Account

More information

Leases (Topic 840) Proposed Accounting Standards Update. Issued: August 17, 2010 Comments Due: December 15, 2010

Leases (Topic 840) Proposed Accounting Standards Update. Issued: August 17, 2010 Comments Due: December 15, 2010 Proposed Accounting Standards Update Issued: August 17, 2010 Comments Due: December 15, 2010 Leases (Topic 840) This Exposure Draft of a proposed Accounting Standards Update of Topic 840 is issued by the

More information

1. Managerial accounting: A. is governed by generally accepted accounting principles. B. places emphasis on special-purpose information.

1. Managerial accounting: A. is governed by generally accepted accounting principles. B. places emphasis on special-purpose information. 1. Managerial accounting: A. is governed by generally accepted accounting principles. B. places emphasis on special-purpose information. C. pertains to the entity as a whole and is highly aggregated. D.

More information

IPSAS 13 LEASES Acknowledgment

IPSAS 13 LEASES Acknowledgment IPSAS 13 LEASES Acknowledgment This International Public Sector Accounting Standard (IPSAS) is drawn primarily from International Accounting Standard (IAS) 17 (Revised 2003), Leases, published by the International

More information

CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS

CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS C H 2 3, P a g e 1 CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS (note from Dr. N: I have deleted questions for you to omit, but did not renumber the remaining questions) 1. The primary purpose of

More information

IAS 16 Property, Plant and Equipment

IAS 16 Property, Plant and Equipment IAS 16 Property, Plant and Equipment By: Martin Kelly, BSc (Econ) Hons, DIP. Acc, FCA, MBA, MCMI. Teaching Fellow in Accounting Queens University Belfast Examiner: Professional 1 Corporate Reporting This

More information

IASB EMERGING ECONOMIES GROUP 8th MEETING December 11-12, 2014 ISSUES FOR DISCUSSON: OTHER NON-FINANSIAL ASSETS AND RELATED MATTERS

IASB EMERGING ECONOMIES GROUP 8th MEETING December 11-12, 2014 ISSUES FOR DISCUSSON: OTHER NON-FINANSIAL ASSETS AND RELATED MATTERS IASB EMERGING ECONOMIES GROUP 8th MEETING December 11-12, 2014 ISSUES FOR DISCUSSON: OTHER NON-FINANSIAL ASSETS AND RELATED MATTERS National Organization for Financial Accounting and Reporting Standards

More information

Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard

Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard SME-FRF & SME-FRS Issued August 2005Revised February 2011 Effective for a Qualifying Entity s financial statements that cover a period beginning on or after 1 January 2005 Effective for a Qualifying Entity's

More information

CHAPTER 57 WORK IN PROCESS AND CONSTRUCTION IN PROCESS

CHAPTER 57 WORK IN PROCESS AND CONSTRUCTION IN PROCESS CHAPTER 57 WORK IN PROCESS AND CONSTRUCTION IN PROCESS A. WORK IN PROCESS 1. Contents of Work In Process. Defense Working Capital Fund (DWCF) activities, primarily those involved in depot maintenance or

More information

Guidance on Accounting Standard for Construction Contracts

Guidance on Accounting Standard for Construction Contracts ASBJ Statement No. 15 Accounting Standard for Construction Contracts and ASBJ Guidance No. 18 Guidance on Accounting Standard for Construction Contracts December 27, 2007 Accounting Standards Board of

More information

New on the Horizon: Revenue recognition for building and construction

New on the Horizon: Revenue recognition for building and construction NOVEMBER 2011 Building & Construction New on the Horizon: Revenue recognition for building and construction KPMG s Building & Construction practice KPMG s Building & Construction practice provides integrated

More information

Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard

Small and Medium-sized Entity Financial Reporting Framework and Financial Reporting Standard SME-FRF & SME-FRS (Revised) Revised April 2014 December 2015 Effective for a Qualifying Entity s financial statements which cover a period beginning on or after 3 March 2014 Early application is not permitted

More information

FUNDAMENTALS OF IFRS

FUNDAMENTALS OF IFRS INVESTMENT PROPERTY (IAS 40) FUNDAMENTALS OF IFRS 20.1 FUNDAMENTALS OF IFRS CHAPTER 20 Investment Property (IAS 40) 20.2 CHAPTER TWENTY INVESTMENT PROPERTY (IAS 40) 20 Introduction Investment Property

More information

Accounting for Property Classification is Key!

Accounting for Property Classification is Key! Accounting for Classification is Key! Article by Helen Fee, BSc, PgD, FCA, Examiner in Professional 2 Advanced Corporate Reporting Introduction Entities hold land and buildings for a variety of reasons

More information

UNCONTROLLED IF PRINTED ACCOUNTING POLICY

UNCONTROLLED IF PRINTED ACCOUNTING POLICY UNCONTROLLED IF PRINTED NAVY CANTEENS ACCOUNTING POLICY Applicability: This procedure is applicable to all RANCCB directors and Navy Canteens, managers and staff in all Navy Canteens business units. Legislation:

More information

Intangible assets other than Goodwill, Business combinations and Goodwill

Intangible assets other than Goodwill, Business combinations and Goodwill Intangible assets other than Goodwill, Business combinations and Goodwill 1.1. Recognition An entity shall apply the recognition criteria stated in Section Concepts and Principles of IFRS for SMEs for

More information

International Accounting Standard 36 Impairment of Assets

International Accounting Standard 36 Impairment of Assets International Accounting Standard 36 Impairment of Assets Objective 1 The objective of this Standard is to prescribe the procedures that an entity applies to ensure that its assets are carried at no more

More information

Illustrative Financial Statements Prepared Using the Financial Reporting Framework for Small- and Medium-Entities

Illustrative Financial Statements Prepared Using the Financial Reporting Framework for Small- and Medium-Entities Illustrative Financial Statements Prepared Using the Financial Reporting Framework for Small- and Medium-Entities Illustrative Financial Statements This component of the toolkit contains sample financial

More information

HKAS 2 Revised July 2012February 2014. Effective for annual periods beginning on or after 1 January 2005. Hong Kong Accounting Standard 2.

HKAS 2 Revised July 2012February 2014. Effective for annual periods beginning on or after 1 January 2005. Hong Kong Accounting Standard 2. HKAS 2 Revised July 2012February 2014 Effective for annual periods beginning on or after 1 January 2005 Hong Kong Accounting Standard 2 Inventories HKAS 2 COPYRIGHT Copyright 2014 Hong Kong Institute of

More information

Project Cost Management

Project Cost Management PDHonline Course P104 (8 PDH) Project Cost Management Instructor: William J. Scott, P.E. 2012 PDH Online PDH Center 5272 Meadow Estates Drive Fairfax, VA 22030-6658 Phone & Fax: 703-988-0088 www.pdhonline.org

More information

SHIRE OF CARNARVON POLICY

SHIRE OF CARNARVON POLICY SHIRE OF CARNARVON POLICY POLICY NO C010 POLICY SIGNIFICANT ACCOUNTING POLICIES RESPONSIBLE DIRECTORATE CORPORATE COUNCIL ADOPTION Date: 27.5.14 Resolution No. FC 5/5/14 REVIEWED/MODIFIED Date: Resolution

More information