There were significant concerns expressed by the Building & Construction sector on the previous ED about the way long term contract accounting would work. In particular, there was concern that they would be obliged to separate contracts into multiple performance obligations and account for them separately.
There were also widespread concerns that revenue on contracts might not be capable of recognition until the contract was complete, leaving to a lumpy revenue and profit profile.
Our paper discusses:
- How the changed proposals have improved the position for the B&C sector compared with the ED issued last year
- Key elements from the 5-step revenue recognition model
- How to achieve recognition of income and profit as a contract proceeds
- Critical judgements to be made at contract inception and throughout a contract life cycle
- New significant disclosure requirements.