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On 26 August 2010, the Accounting Standards Council (ASC) issued INT FRS 115 Agreements for the Construction of Real Estate and an Accompanying Note (AN), which is an integral part of INT FRS 115. The AN concludes that standard residential property sales meet the criteria for continuous transfer of control and the significant risks and rewards of ownership of the uncompleted property units. Consequently, such sales should be accounted for using the Percentage of Completion method. For sales of real estate other than standard residential property sales, developers need to refer to the principles set out in FRS 11 Construction Contracts, FRS 18 Revenue and INT FRS 115 to determine the appropriate manner to account for such sales.
This article provides an overview of the assessment of the accounting treatments for various real estate developments in Singapore such as the Executive Condominiums, Mixed Development Properties, Commercial Properties and Design, Build and Sell Scheme Properties.
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The purpose of this paper is to provide clarifications on the timing when revenue is recognised for sale of uncompleted residential properties. Certain examples have been presented to illustrate the determination of the appropriate timing when revenue should be recognised.
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Click here for INT FRS 115 Click here for the Article