Accounting standards
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 April 2012
Brief the AS7 and AS9 and the difference between the two standards
09 April 2012
For accounting of constructon contracts AS 7 is applicable only, & according to AS 7 when the outcome of a construction contract can be measured reliably contract revenue & contract cost associated to such contract should be recognised in the Financial Statements.
So for recognition of revenue from construction contracts AS 7 is there,
AS 9 does not cover the revenue reocgnition from construction contracts. If AS 7 (Revised 20XX) applies: Revenue is recognised on a percentage-of-completion
basis provided that reliable estimates of construction progress and future costs can be
made.
If Exposure Draft of AS 9 (Revised 20XX) applies: The agreement can be for rendering
services and it can be for sale of goods. If the entity is not required to acquire and supply
construction materials, it is an agreement for rendering services. If the entity is required
to provide services together with construction materials in order to perform its
contractual obligation to deliver real estate to the buyer, the agreement is accounted for
as the sale of goods as per the Exposure Draft AS 9 (Revised 20XX).
Likely impact of the proposed Appendix C of the Exposure Draft of AS 9 (Revised 20XX)
when an agreement is treated as agreement for sale of goods, is the deferment of
revenue recognition as construction progresses to the point of time of completion of the agreement
So for recognition of revenue from construction contracts AS 7 is there,
AS 9 does not cover the revenue reocgnition from construction contracts. If AS 7 (Revised 20XX) applies: Revenue is recognised on a percentage-of-completion
basis provided that reliable estimates of construction progress and future costs can be
made.
If Exposure Draft of AS 9 (Revised 20XX) applies: The agreement can be for rendering
services and it can be for sale of goods. If the entity is not required to acquire and supply
construction materials, it is an agreement for rendering services. If the entity is required
to provide services together with construction materials in order to perform its
contractual obligation to deliver real estate to the buyer, the agreement is accounted for
as the sale of goods as per the Exposure Draft AS 9 (Revised 20XX).
Likely impact of the proposed Appendix C of the Exposure Draft of AS 9 (Revised 20XX)
when an agreement is treated as agreement for sale of goods, is the deferment of
revenue recognition as construction progresses to the point of time of completion of the agreement
Querist : Anonymous
Querist :
Anonymous
(Querist)
14 April 2012
thank you sir
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Need to correct "Whether it is last installment " response in Form 26 QB
- " Income from House Property " in joint names of co-owners
- REGARDING TDS RETURN OF FORM 27Q
- Notice under e-Verification Scheme
- GST demand notice for ITC reversal against exempted supply.
- RCM ON SECURITY CHARGES FROM INDIVIDUALS
- How to get money back from delisted company
- ITC not to be taken in accounts & GSTR-3B
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
