RECOGNITION OF REVENUE FOR REAL ESTATE DEVELOPER

Others 374 views 2 replies

RISHI JHAJHARIA

2 Points Joined December 2022

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?

Replies (2)

Yasaswi Gomes new

Finance

4545 Points Joined September 2020

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.

sabyasachi mukherjee

27910 Points Joined May 2017

There are some issues relating to construction contract. AS7 OR AS9.THESE ARE MAIN ISSUES INVOĹVED.
COST PLUS CONTRACT
PROPORTIONATE METHOD
OR OTHERS.