Dear All
In real estate we follow some accounting standards like AS 7 ( construction contracts) and AS9 (Revenue recognition) and on the basis of that we record sales and its direct expenses... So for example if a buyer pays us 15 % of the total amount in the year in which development agreement was signed and also it is reflecting on 26 AS so my question is why are we including it as a part of turnover in that year even though AS7 and AS9 is not fulfilled?
As 26 is not covering as7 or as 9. Some Development costs are capitalised and they dont use construction contracts methods. Only the cost is reliably measured and when there is a benefit from the cost, its made an asset. If the same amount is shown as revenue tnen there is an accounting error. Revenues are from operations and capital expenses are capitalised but not recognised as revenues.
Naveen Fintech Pvt Ltd
Kolkata
CA Inter
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Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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CAclubindia
