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Recognition of revenue

Washington DCConstruction AccountingPay Applications

Good morning Mr David, Trust this mail meets you well. I am currently having issues with our external auditors on recognition of revenue in the books of our company that is into real estate development. Here is the summary, the modus operandi of the business is to buy a virgin land, develop units of flats on the same and sell the same to subscribers. In the books of the company, deposits made by the subscribers for any ongoing project is recognized as a liability while the development cost on the same is treated as an inventory pending completion of the project. So, in any financial year that a project is completed, the Subscribers deposit in the SOFP is debited while revenue in the SOPL is credited with the total amount received. Also, the Development cost (as an inventory in the SOFP) is credited while development cost in the SOPL is debited. At the moment ,we are having difficulty in applying IFRS 15 in recognizing revenue to be reported for the period ended 31st Dec 2021 because the projects are still ongoing. The following are my questions: Is IFRS 15 applicable in this scenario. If yes, how best can we resolve this? If No, what other options are available for us to be able to recognize revenue without violating the standard. I will appreciate your prompt response and professional advice on this . Regards Sunday Babajide

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