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In Singapore, it is a common market practice for residential properties to be sold off-plan i.e. before the construction is completed (“uncompleted residential properties”). From 1 January 2018 onwards, Singapore property developers are required to apply the accounting principles in Singapore Financial Reporting Standard (FRS) 115 Revenue from Contracts with Customers to the sales of uncompleted residential properties in Singapore. So how will the application of the new FRS 115 change the current accounting treatment for these uncompleted residential properties?
ISCA’s Financial Reporting Committee (FRC), through its Core Sub-Committee, has discussed the application of FRS 115 on the sale of uncompleted properties under the standard Sales and Purchases Agreements (SPA). FRC is issuing this guidance to share their discussions and consensus reached. Generally, FRC does not expect changes with respect to whether revenue is recognised over time or at a point in time for sales of uncompleted residential properties in Singapore using the standard SPA, except for those sold under a deferred payment scheme. FRC considers that those rights and obligations under the standard SPA would allow the developer to recognise revenue over time under FRS 115.
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