Construction Accounts : Profits until the project completes.?

Question

How should a builder show yearly profits/loss in case of Construction (real estate) of a building which shall take many years to complete?The building will eventually be sold out on completion.
Please suggest a website if any which demonstrates / explains the Book-keeping and accountancy of a construction firm.

Answer 1

This is not an easy topic. You should be guided by IAS 11 Construction Contracts. An extract -

"Accounting

If the outcome of a construction contract can be estimated reliably, revenue and costs should be recognised in proportion to the stage of completion of contract activity. This is known as the percentage of completion method of accounting. [IAS 11.22] To be able to estimate the outcome of a contract reliably, the enterprise must be able to make a reliable estimate of total contract revenue, the stage of completion, and the costs to complete the contract. [IAS 11.23-24]

If the outcome cannot be estimated reliably, no profit should be recognised. Instead, contract revenue should be recognised only to the extent that contract costs incurred are expected to be recoverable and contract costs should be expensed as incurred. [IAS 11.32]

The stage of completion of a contract can be determined in a variety of ways - including the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs, surveys of work performed, or completion of a physical proportion of the contract work. [IAS 11.30]

An expected loss on a construction contract should be recognised as an expense as soon as such loss is probable. [IAS 11.22 and 11.36] "

To summarise, there are 2 generally accepted methods of a/cg for constr. contracts - percentage of completion method and completed contract method.

Percentage of completion
This method reports revenue more uniformly over the period of construction, but can only be used if certain estimations can be made, e.g. if you have already shown the buyer the plans for the building and the sale price has been determined, say, 10m. Then at the end of every period, you have to estimate the percentage of completion by whatever means is available to you (e.g. architect's certification, cost incurred by yr-end compared to expected total cost, etc), say 10% completed. In that period you have to recognise 10% of 10m as revenue and 10% of estimated total cost as cost.

Completed contract method
Under this method you collect all costs incurred in a Construction in Progress a/c until the whole project is completed, then you recognise revenue and cost all at the same time. This method means you can go for a few yrs without reporting any revenue and is not preferred.

The above is very simplified. Like I said, you need to read the full IAS 11 for guidance.

In addition, if you live in the US, your irs has certain tips which can be found at the 2nd link. It discusses how construction companies should a/c for profits using the accruals method, and requries you to ascertain whether the contract is home construction or general constr, whether you're a small or large contractor, etc, etc.

Answer 2

Under the completed contract method, you accumulate all identifiable costs into a contruction in progress a/c until the project is completed. Identifiable costs include depreciation of machinery and equipment directly used in the construction project. Office expenses will be expensed off to the income statement in the period in which they are incurred. This doesn't absolve the accountant from complying with other GAAPs, including the accrual basis of accounting, so yes, prepayments and accruals are recorded as usual.

For the best answers, search on this site https://smarturl.im/aDC3a

Answer 3

Discover now the best sport betting system: http://sport-betting-tips.checkhere.info

Too many people think of sports betting as just something they do in their past time. However, many people can see the potential that exists if you manage to have the right sports betting strategy and correct approach to betting in general. Are you sick of losing? Interested in finding out how to turn your luck around? Do you want to know which sports betting strategies stand to help you make the most from your betting?

Any good strategy should allow you to place bets based on a systematic method. Of course there is always a random element or so called luck involved, but betting is all about stacking the odds in your favor. There should be no guess work involved or bets placed based on gut feelings. Betting is a business and it should be treated like one. Any money you use for betting needs to be separate from money you use for your daily life or anything else. How can you possibly expect to follow a strategy with money that was originally set aside to pay next week's rent with? You can't. This will help you to focus on the task of betting and remove any emotional strings attached to the money.

So what makes a good strategy or what should you look for in a strategy before you decide to implement it? Any good strategy needs to have a positive expectancy. This means that in the long run you will win. The hit rate of the strategy needs to be above 50% for you to be able to profit in the long run. An ideal win rate should be between 60 to 70%, because you will need to cover the fees and other expensive associated with betting. Is it feasible to expect you'll be able to find a system that has a 100% win rate? No, it isn't. The best you can do is find a system that has a positive expectancy and stick with it. In the long run you will make more money than you can possibly lose.

Keep whatever information and news you have about the teams as up to date as possible. Any changes in the teams makeup or factors that affect how the players play will great affect the potential outcome of a match. Make sure that you are constantly up to date on every aspect that affects the potential outcome of a match. Information is the key to winning at sports betting.

Answer 4

Is basically to gain at activity betting with the Zcodes System that you will discover here https://tr.im/An1ob .
Zcodes System is an application that may gives you completely automated sports recommendations based on a powerful forecast model. It then bottles you the information each and every day of the year with simple recommendations on the best way to position bets and regularly win.
Zcodes System covers all of the key events in the sporting schedule then when one sports season stops, yet another is already finding started.
Zcodes System includes sports like: baseball, baseball, baseball, soccer, hockey, horse race and a whole fill more.

Answer 5

Sports betting systems are sets of events that when combined for a particular game for a particular sport represents a profitable betting scenario