IFRS Accounting and Long Term Contracts Accounting

May 22, 2018 | By admin4u | Filed in: Uncategorized.

The general concepts and principles used to identify revenue are similar to GAAP and IFRS. They are different in detail. GAAP provides specific guidelines for recognizing revenue for many industries, while the IFRS does not. The International Accounting Standards Committee presents revenue, both earnings and revenue. In GAAP work, earnings and profits include completely separate definitions.

Generally, the basis for revenue accounting for International Financial Reporting Standards is primarily based on the likelihood that the transaction-related, economically advantageous benefits will be transferred to the merchandise and so on. Costs and revenues must be measured reliably. The concepts used by GAAP, such as realized, realized and acquired, are the basis for revenue recognition.

International Financial Reporting Standards have only one basic standard of revenue recognition. This is IAS 18. However, GAAP has a number of standards that are related to revenue recognition. Accounting for revenue is the most appropriate contrast to the core and GAAP approaches of International Financial Reporting Standards. Differences exist on both sides, but the International Accounting Standards Board and the Financial Accounting Standards Board have identified areas for improvement

Revenue is recognized at fair value of the consideration received or received in accordance with International Financial Reporting Standards. GAAP makes revenue more apparent from the fair value of the goods and services offered and the fair value of the goods and services received. Generally, sales invoicing is similar to GAAP and International Financial Reporting Standards. Detailed policies are provided by GAAP. An example of this is the right of return and the settlement of multiple negotiable agreements. The use of completed contractual accounting methods for long-term contracts is prohibited by International Financial Reporting Standards. Under IFRS, companies should take into account the termination method when calculating long-term contracts. If costs and revenue are difficult to estimate, companies should only account for the costs they incur. This means that a cost-recovery approach should be applied.

Recognizes the percentage and method of cost recovery of long-term contracts

Recognize the GP and revenue at all times, simply by the percentage of completion of a construction process, ie the performance of a project proportion. Building costs are accumulating and the gross earnings gained today are put into an inventory account. It also collects prepayments on a Counterfeit invoice. This method is consistent with IFRS and GAAP

When working with a cost reimbursement method, contingent revenue is only recognized if the costs incurred are recovered. Profit will be recognized when all costs are recognized. In this case, construction costs accumulate in the construction process inventory account, and deferred accounts accumulate in the ongoing construction bill. The fact that the percentage of performance of long-term contracts is taken into account is that, for most contracts, the buyer and the seller each have enforceable rights. The buyer has the right to legally provide specific performance for the contract. The seller has the right to claim advances that prove his ownership. As a result, continuous sales continue to work

Companies should use the percentage calculation method of performance if the estimation of performance, revenue and costs can be estimated reliably and all of the following conditions exist:

• Contract revenue can be measured reliably

• It is probable that the contractual economic benefit will flow to the company

• The costs of performance of the contract and the performance of the contract at the end of the reporting period can be measured reliably

• and contractual costs can be clearly identified and measured so that actual contracting costs can be compared with preliminary estimates

Companies should use the cost recovery method if the following conditions are

• If the terms of use of the percentage of performance are not met [19659002] • And when the contract involves risks beyond the usual business risk

Source by Rocco Picciano

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