Construction accounting

Construction accounting guides

• Construction accounting: the key IFRS issues3 minute readConstruction accounting explained: revenue over time under IFRS 15, measuring progress, variations and claims, loss-making contracts, retentions and JVs.
• Construction revenue over time3 minute readConstruction revenue recognition over time under IFRS 15: control on the client's land, no alternative use, right to payment, cumulative catch-up, example.
• The cost-to-cost method of measuring progress3 minute readHow the cost-to-cost method measures progress on construction contracts under IFRS 15: which costs count, uninstalled materials, waste, with an example.
• Variations and claims3 minute readConstruction variations and claims under IFRS 15: approved modifications, unpriced change orders and the variable consideration constraint, with an example.
• Loss-making construction contracts3 minute readHow contractors account for loss-making construction contracts: the IAS 37 onerous contract provision, costs of fulfilling, timing and US GAAP, with an example.
• Retentions and the financing component3 minute readHow construction retentions are accounted for under IFRS 15: contract asset or receivable, why there is usually no financing component, ECL and payables.
• Contract assets and liabilities in construction3 minute readContract assets and liabilities in construction under IFRS 15: receivables, netting by contract, advance payments and backlog disclosures, with an example.
• Mobilisation and tender costs3 minute readHow contractors treat tender and bid costs, success fees and mobilisation costs under IFRS 15: what is expensed, what is capitalised and how it is amortised.
• Liquidated damages and penalties3 minute readHow contractors account for liquidated damages for late completion under IFRS 15: variable consideration, estimating delay, extensions of time, examples.
• Construction joint ventures3 minute readHow construction joint ventures and consortia are accounted for under IFRS 11: joint operations vs joint ventures, shares of revenue, equity method, example.
• Uninstalled materials3 minute readHow uninstalled materials are treated under IFRS 15: the four conditions for recognising revenue at cost, materials in stores and items the contractor makes.
• Defects liability and warranties3 minute readHow contractors account for defects liability periods and warranties: assurance warranties under IAS 37, extended maintenance under IFRS 15, latent defects.
• Borrowing costs on construction projects3 minute readWhen borrowing costs on construction projects are capitalised under IAS 23: qualifying assets, contractors vs developers, specific and general borrowings.

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About these guides

Each guide starts from an accounting issue construction companies actually face and works through it with numbers from the industry. 13 of 13 planned guides are published; more are added with every batch.