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As for construction contracts ( as 7)

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(Querist)
03 July 2013 I am not clear regarding the revenue recognition with respect to construction contracts, especially the case where expected costs exceeds expected revenue!
I have come to known that such a situation demands the expected loss to be treated as an expense.
But I have come across a situation where, % of completion is applied on such expected loss, and is stated that such portion is to be recognized in the P&L.. and the balance shall be provided for as provision-- Isn't this according to CONSTRUCTION CONTRACTS??
I have searched for illustrations on similar cases, but I couldn't figure out any!

Kindly clarify my concept,
Regards,
Hari krishnan.
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Dr. Rashid Mehmood, CPA, Ph.D

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Dr. Rashid Mehmood, CPA, Ph.D (Expert)
04 July 2013 See the International Accounting Standard 11

Whatever the method to recognize the revenue is used, in case of expected loss you have to account for all in the P&L account in the year when the expected loss is measured reliably.
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