Construction contract modifications

Ever heard of a constructing a major new building, large bridge, metro railway or other significant construction project without contract modifications? Especially in the large urban agglomerations in this world….. Well then look at this: Denver airport construction Metropolitan Transportation Authority (MTA New York) capital projects And technology initiatives to avoid it: Artificial intelligence (AI) …

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Construction – Variable pricing

How to measure construction contract revenue: variable consideration – variable pricing? Construction – Variable pricing If the consideration promised in a contract includes a variable amount, then an entity estimates the amount of consideration to which it expects to be entitled. Consideration can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, …

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Construction contracts – Measuring progress

This part relates to a complete explanation of IFRS 15 Revenue from contracts with customers in respect of Engineering & Construction contracts, see Revenue from Engineering & Construction contracts. When a performance obligation is satisfied over time, the standard provides two types of methods for measuring progress under the contract: input methods or output methods. …

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Construction contracts revenue – over time or at a point in time?

The rule: If the contract arrangements do not permit revenue to be recognised progressively, then revenue is recognised at a specific point in time on transfer of control, which for a construction contract will likely be close to completion. The explanations: Should a contractor recognise revenue as construction work takes place or on practical completion? …

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Contract enforceability and termination clauses

An entity has to determine the duration of the contract (i.e., the stated contractual term or a shorter period) before applying certain aspects of the revenue model (e.g., identifying performance obligations, determining the transaction price). The contract duration under IFRS 15 is the period in which parties to the contract have present enforceable rights and …

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Royalty income intellectual property

IFRS 15 provides application guidance on the recognition of revenue for sales-based or usage-based royalties on licences of intellectual property, which differs from the requirements that apply to other revenue from licences. IFRS 15 B63 requires that royalties received in exchange for licences of intellectual property are recognised at the later of when: (a) The …

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Determining stand-alone selling prices

To allocate the transaction price on a relative stand-alone selling price basis, an entity must first determine the stand-alone selling price of the distinct good or service underlying each performance obligation. Under the standard, this is the price at which an entity would sell a good or service on a stand-alone (or separate) basis at …

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