This Project is funded by EU

for Accounting Professionals

IAS 11 CONSTRUCTION CONTRACTS

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PREFACE
CONTENTS
This series of workbooks has been updated by the project team of the European
Union project Implementation of the Accounting Reform in the Russian Federation. 1 CONSTRUCTION CONTRACTS- INTRODUCTION AND
DEFINITIONS.................................................................................4
The workbooks cover the concepts of International Financial Reporting
Standards (‘IFRS’.. They are intended to be practical self-instruction aids
that practicing accountants can use to upgrade their knowledge, understanding and 2 CONTRACT REVENUE.................................................................5
skills.
3 CONTRACT COSTS......................................................................6
Each workbook is designed for a maximum of three hours of study.

Each workbook is a combination of: 4 RECOGNITION OF CONTRACT REVENUE AND

EXPENSES.....................................................................................6
 Information with examples
 Self Test Questions – Multiple choice and Exercises 5 STAGE OF COMPLETION CALCULATION..................................7
 Answers to Self Test Questions

The members of the project team were contributed by PricewaterhouseCoopers, 6 RECOGNITION OF EXPECTED LOSSES AND CHANGES
ACCA, FBK and Agriconsulting. IN ESTIMATES...............................................................................8

The Workbook Series consists of a range of titles listed on our website.

7 DISCLOSURE................................................................................9
The copyright of the material contained in each workbook belongs to the
European Union and, according to its policy, may be used free of charge for any 8 SPECIFIC EXAMPLES...................................................................9
non-commercial purpose.

The project team would like to express thanks to those who have contributed 9 MULTIPLE CHOICE QUESTIONS...............................................12
their time and thoughts to the content of the workbooks.
10 EXERCISE QUESTIONS..............................................................15
Contact:

e-mail Web 11 Solutions.......................................................................................18

Victoria.stepanova@ru.pwc.com www.accountingreform.ru
Tel. + 7 495- 967-6000 Fax. + 7 495- 967-6001

Moscow, Russia, January 2007 (updated.

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IAS 11 Construction Contracts
Cost-plus Contract
1 Introduction and Definitions A cost-plus contract is a contract where the contractor is reimbursed for
1.1 AIM allowable costs, plus a percentage profit (or fixed fee.. Cost plus is the
standard for particular contractees (e.g.some government bodies.
The aim of this workbook is to assist the individual in understanding
Construction Contracts according to IFRS. Construction Contracts are the Example:
subject of International Accounting Standard 11. You agree to build a chemical plant for the contracted costs, plus a 10% profit.

1.2 OBJECTIVE AND PREPARATION This is a cost plus contract.

The start and finish of Construction Contracts often fall in to different 1.4 SCOPE
accounting periods. Thus, the timing of recognition of contract revenue and
contract costs is a key issue of the standard. Construction contracts include:

An effective internal financial budgeting and reporting system, which is kept  Services related to the construction, such as project managers and
up-to-date at all times, is required to control construction contracts. Regular architects.
reviews of costs and revisions of estimates are necessary throughout the  Contracts for destruction, or restoration, of assets and the restoration
contract. of the environment.

1.3 DEFINITIONS Example:

You are building a new road. A clause in the contract requires you to restore
Construction Contract all grass verges beside the new road.

A construction contract is a contract made for the construction of one or more, The restoration is part of the road contract.
assets that are closely-related, or interdependent in their design, technology,
and function, or their purpose or use. Combining and Segmenting Construction Contracts

Fixed-price Contract When a contract covers more than a single asset, the construction of each
asset should be treated as a separate contract when:
A fixed-price contract is a contract in which the parties agree to a fixed price,
or a fixed price per unit of output. 1. Separate proposals have been submitted for each asset;
Cost-escalation clauses may be a feature of these contracts. 2. Each asset has been a separate negotiation and each party could
reject the part of the contract applying to that asset; and
Example: 3. Costs and revenues of each asset can be measured.
You agree to build an office block over a 3-year period for $10million. At the
end of years 1 & 2, unbilled revenue will be increased by the national rate of Example:
inflation recorded on the 31st of December. You have a master contract to build 800 houses for a developer over a 2-year
period, in different locations throughout the region.
This is a cost escalation clause. The cost for each group of houses is negotiated separately, and you receive a
10% profit, based on the agreed cost.
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IAS 11 Construction Contracts
Each group should be treated as a separate contract.
A group of contracts, with one client or more, should be treated as a single
contract when:
1. The contracts were signed as a single package;
2. The contracts are so closely related that they are, in substance, part of
a single project with an overall profit margin: and
3. The contracts are performed concurrently, or in a continuous
sequence.
Example:
You have contracts to build 12 standard hotels. Land preparation is done by
the client, so building costs are similar for each hotel.
This should be treated as a single contract.
A contract may provide for an additional asset at the client’s option, or by way
of an amendment. This will be treated as an additional contract when:
1. The asset is fundamentally different from those included in the original
contract.
2. The price of the new asset is agreed without regard to the original
contract price.
Example:
You are building a hospital, and your client asks you to build a swimming pool
in the grounds, at a price to be negotiated.
This will be treated as an additional contract.
1.5 CONTRACT REVENUE
Contract revenue should comprise:
1. The initial revenue agreed.
2. Variations in the contract work, claims and incentive payments.
(These are included if it is probable that they will result in revenue,
and are capable of being reliably measured..
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The contract revenue may change from one period to the next, as a result of
contract variations, claims, penalties, and cost-escalation clauses.
Variations may increase, decrease, or redesign the scope of the contract, with
a matching change in revenue.
They are only included in revenue when it is likely that the client will approve
the variation and its impact on the revenue, and the change in revenue can be
reliably measured.
Example:
You are building a road. The original plan called for a bridge over a railway,
but the authorities now insist on a tunnel under the railway instead.
This is a variation.
Claims are levied by the contractor on the client for costs not included in the
contract price. Normally, these stem from problems caused by the client, such
as wrong specifications, errors in designs, and delays.
Example:
You have been contracted to demolish some houses, and build new ones. You
were promised vacant possession. When your staff arrives, they find that the
tenants still occupy the old houses. It takes a month to re-house them,
delaying the start of work.
This may be the basis for a claim.
Clients may contest the claims, so they should only be included in project
revenue when the amount of the claim that is likely to be paid can be reliably
determined.
Incentive payments are bonuses paid if the contractor meets or exceeds
specific criteria, such as early completion of part, or all, of the contract. They
are included in contract revenue when it is likely that they will be earned.
Example:
You are building a factory. If the actual completion date is a month (or more.
earlier than the planned date, your firm will earn a bonus (and the client can
start production early..
This is an example of an incentive payment.
IAS 11 Construction Contracts
Other costs chargeable to the client may include some general overheads, or
Contract estimates need to be revised, either for actual performance, or new development costs, that the client has agreed to be billed under the contract.
considerations of future performance.
Example:
Example: You are building 100 hotels, of various styles. Your client asks that you spread
You are redeveloping a site in the city centre. You had planned to work 24 the architects’ fees over costs of all the hotels.
hours per day, but the city has just passed regulations to halt building work at
night. This is an example of general development costs being spread over different
contracts.
You may have to revise your contract estimate.
Costs allocated to contract activity in general include:
1.6 CONTRACT COSTS
1. Construction overheads.
Contract costs comprise: 2. Insurance.
3. Borrowing costs.(These are the subject of IAS 23..
1) Costs that relate specifically to the contract.
2) Other costs chargeable to the client, under the terms of the Costs that are not included in the contract, and cannot be allocated to the
contract. contract, are treated as general overheads.
3) Costs allocated to contract activity in general, which are allocated
to the contract. Costs incurred in securing a contract can be included as contract costs, if they
are separately identifiable, and it is likely that the contract will be won.
Costs relating specifically to the contract include:
Example:
1. Site labour costs, including supervisors. You have a team whose sole job is to write bids for construction contracts, and
2. Materials used in construction. negotiate them up to the point of signing contracts. All costs can be allocated
3. Depreciation of plant and equipment used. to separate bids.
4. Transport of staff, materials and assets to the site.
5. Hiring plant and equipment. Their costs should be expensed in each period, except those costs for bids
6. Contract design and technical assistance work. likely to be won.
7. Rectification, guarantee, and expected warranty costs.
8. Claims from third parties. 1.7 RECOGNITION OF CONTRACT REVENUE AND EXPENSES
Incidental income (from sale of equipment at the end of the contact, surplus Contract revenue and costs should be recognised by reference to the stage of
materials and scrap. will reduce these costs. completion (‘percentage of completion’. of the contract at the balance sheet
date.
Example:
You are demolishing an old building, prior to building a new one. You sell the Any expected loss on the contract should be recognised immediately.
materials from the old building for scrap.

This is incidental income.

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 IAS 11 Construction Contracts
Example:
You have been notified by a subcontractor that his costs (to you. for next year
will increase by 15%. You cannot bill your client for this increase, it will cause
you to lose money on the contract, and can find no alternative supplier.
Recognise the anticipated loss immediately.
For fixed-price contracts, the result can be estimated when the following
conditions are satisfied:
1. Total revenue can be measured reliably.
2. Contract costs to complete can be measured reliably.
3. The stage of completion is known.
4. Actual costs can be compared with prior estimates.
For cost-plus contracts, contract costs must be identifiable, whether or not
they are reimbursable.
Using the percentage of completion method, revenue and costs are
recognised in the income statement in the periods, in the periods in which the
work is done.
Any anticipated excess of total contract costs over total contract revenue
should be recognised immediately.
Contract costs that relate to future work on the contract, and for which the
client will pay, can be treated as an asset, usually work in progress.
Example:
You are building a hospital, and have imported some insulation material that
will not be needed until next year. (This was done to avoid an imminent price
rise, announced by the supplier..
You have also paid an advance to a subcontractor.
Both items should be booked to work in progress.
If there is a risk that revenue, that has already been recognised, may not be
paid, the uncollectable amount is recognised as an expense immediately on
recognition. It is not an adjustment of revenue.
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Example:
You are a subcontractor. The contractor has approved your work, and you
have recognised the revenue according to the contract. The client is delaying
payment, for reasons that are not clear. You should create a doubtful debt
provision for the disputed revenue.
1.8 STAGE OF COMPLETION CALCULATION
The contract is the main reference. Methods may include:
1. The proportion that costs incurred for the work to date relate to the
estimated total costs.
Example:
You are building a chemical complex, for which your costs will be $10million.
So far you have spent $4million. Assume that the project is 40% complete,
unless there is any evidence to the contrary.
2. Surveys of the work done.
Example:
You are building an airport. The client’s surveyors have confirmed that 37% of
the work is complete, and recommended payment for the work.
3. Completion of a physical portion of the work.
Example:
You are building 300 houses. 75 are complete, and no work has been done
on the other 225. Treat your contract as 25% complete, unless there is any
evidence to the contrary.
Costs incurred relating to future work on the contract, including advance
payments to subcontractors, should not be included in the calculation.
Note: Progress payments and advances received from clients often do not
reflect the work done.
 IAS 11 Construction Contracts
Example:
On signing a contract to build a department store, you receive a payment of
10% of the contract price.
Treat this as an advance payment, and do not recognise any revenue, at this
time.
When the outcome of a Contract cannot be estimated:
 No profit is recognised, though an expected loss should be
recognised immediately.
 Revenue should only be recognised to the extent that it is likely to
be chargeable to the client.
 Costs should be recognised in the period in which they are
incurred.
Common causes of such uncertainty over the outcome include:
1. Financial difficulties of contractor, or client.
Example:
Your client has not paid you for your work on the agreed date.
Arguments ensue, but you think that your client has serious financial problems,
and the contract is at risk.
2. Pending litigation or legislation.
Example:
You are rebuilding a chemical plant. The government finds toxic effluent has
been leaking from the site, and applies to the court for an order to stop work.
3. Lack of clarity in the contract on reimbursement of costs.
Example:
You are building a hotel. Government officials demand additional safety
features, which are not covered by the contract. You submit a variation
proposal to the client, who refuses it, claiming the cost is yours.
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4. Anticipated failure to complete the contract.
Example:
You are building a road 200kms long. Part of the route becomes flooded, and
you cannot determine whether or not the road will be completed within the
contract period.
2 Recognition of Expected Losses and
Changes in Estimates
Any anticipated excess of total contract costs over total contract revenue
should be recognised immediately.
This should happen, regardless of:
1.Whether or not work has started on the contract.
Example:
You are going to build a hotel on a cliff. You hire staff, machinery and
materials. You travel to the cliff, and find that it has fallen into the sea. The
client offers another site, but for the same contract price.
This would reduce your loss, but not eliminate it. Recognise the loss
immediately.
2. The stage of completion.
3. The amount of profits on other contracts.
Example:
You have 5 separate construction contracts with the same client. Your project
in France is hit by strikes, which means additional costs, and penalties for late
completion. This will create a loss for the project, though the 4 other projects
will make enough profits to cover the loss.
You must still recognise the loss on the French project immediately.
IAS 11 Construction Contracts
CHANGES IN ESTIMATES
The percentage of completion method is calculated on a cumulative basis, in
each period. It is based on current estimates. A change in estimates of final
revenue, or costs, are recognised in the period that the change is made.
An enterprise should disclose:
(a. the gross amount due from customers for contract work as an asset;
and
(b. the gross amount due to customers for contract work as a liability.

The gross amount due from customers for contract work is the net amount of:
3 7 Disclosure
(a. costs incurred plus recognised profits; less

An enterprise should disclose: (b. the sum of recognised losses and progress billings

1) the amount of contract revenue recognised as revenue in the for all contracts in progress for which costs incurred plus recognised
period; profits (less recognised losses. exceeds progress billings.

2) the methods used to determine the contract revenue recognised in
the period; and
3) the methods used to determine the stage of completion of
contracts in progress.
The gross amount due to customers for contract work is the net amount of:
(a. costs incurred plus recognised profits; less
(b. the sum of recognised losses and progress billings

An enterprise should disclose each of the following for contracts in progress at for all contracts in progress for which progress billings exceed costs incurred
the balance sheet date: plus recognised profits (less recognised losses..
1. the aggregate amount of costs incurred and recognised (less
recognised losses. to date An enterprise discloses any contingent liabilities and contingent assets in
2. the amount of advances received; and accordance with IAS 37 Provisions, Contingent Liabilities and Contingent
3. the amount of retentions Assets.

Retentions are amounts of progress billings, which are not paid until the Contingent liabilities and contingent assets may arise from such items as
satisfaction of conditions specified in the contract for the payment of such warranty costs, claims, penalties or possible losses.
amounts or until defects have been rectified.

Progress billings are amounts billed for work performed on a contract whether
or not they have been paid by the customer.
Advances are amounts received by the contractor before the related work is
performed.
4 Specific Examples
Example 1: Determination of Contract Revenue and Expenses
The following example illustrates one method of determining the stage of
completion of a contract, and the timing of the recognition of contract revenue
and expenses.

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 IAS 11 Construction Contracts
A construction contractor has a fixed-price contract for $10000 to build a To Date Recognised in Recognised in
tunnel. The contractor's initial estimate of contract costs is $7500. It will take 3 Year 1 ($000’s. prior years current year
years to build the tunnel.
Revenue (10,000 x 33%. 3333 - 3333
By the end of year 1, the contractor's estimate of contract costs has increased Expenses (7,500 x 33%. 2500 - 2500
to $8400.
Profit 833 - 833
In year 3, the client approves a variation resulting in an increase in contract Year 2
revenue of $500 and estimated additional contract costs of $250. At the end of
year 2, costs incurred include $300 for materials to be used in year 3. Revenue (10,000 x 60%. 6000 3333 2667
Expenses (8,400 x 60%. 5040 2500 2540
The stage of completion is determined by calculating the proportion that costs
incurred for work done so far bear to the estimated total costs. Profit 960 833 127
A summary of the financial data during the construction period is given on the Year 3
next page:
Revenue (10,500 x 100%. 10500 6000 4500
The stage of completion for year 2 (60%. is determined by excluding costs
Expenses 8650 5040 3610
incurred for work performed to date the 300 of materials for use in year 3.
Profit 1850 960 890
The amounts of revenue, expenses and profit recognised in the income
statement in the three years are as follows:

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IAS 11 Construction Contracts
Total
($000’s. 1 2
Specific example 2:

Contract Disclosures Contract Revenue 1600 1000 2600

Contract Expenses 1250 1100 2350
In the next example, another contractor has reached the end of its first year of -
operations. Expected Losses 60 60
Recognised profits less
Both its contracts’ costs incurred have been paid for in cash. recognised losses 350 -160 190
All its progress billings and advances have been received in cash.
Contract costs incurred for contract 2 include the cost of materials that have Contract Costs incurred in the
been purchased for a future period. period 1700 1100 2800
For contract 1, the client has made an advance to the contractor for work not
Contract Costs incurred 1250 1100 2350
yet performed.
recognised as contract expenses
in the period (as above.
The status of its contracts in progress at the end of year 1 is as follows:
Contract Costs that relate to a
future period 450 - 450
Contract Revenue (as above. 1600 1000 2600
Progress Billings 1600 850 2450
Unbilled Contract Revenue - 150 150
Advances 250 - 250

The amounts to be disclosed are:

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IAS 11 Construction Contracts
Contract revenue recognised in the period
2600
9 Multiple Choice Questions
Contract costs incurred and recognised profits
(less recognised losses. to date 2990 1. The start and finish of Construction Contracts normally fall in to:
Advances received 250
1) the same accounting period.
Gross amount due from clients for contract 450* 2) different accounting periods.
work - presented as an asset in accordance
Gross amount due to clients for contract 2. A key issue of the standard is:
work -presented as a liability -60*
1) The timing of recognition of contract revenue and contract costs.
2) Selection of reporting currency.
* Please see the following table. 3) Balance sheet structure.
The last 2 amounts above are 1 2 Total
calculated as follows: 3. An effective internal financial budgeting and reporting system to control
construction contracts is:
Contract Costs incurred
1700 1100 2800 1) Helpful.
Recognised profits less 2) Unnecessary.
3) Required.
recognised losses 350 -160 190
Subtotal 2050 940 2990 4. Cost-escalation clauses may be a feature of fixed-price contracts:
Progress billings 1600 1000 2600 1) True.
Due from clients 450 - 450 2) False.

Due to clients - -60 -60 5. In a cost-plus contract, you can charge:

1) All costs plus a profit margin.

2) Costs agreed under the contract, plus an agreed profit.

6. You can combine and segment construction contracts:

1) To reduce work.
2) To reflect economic reality, under specified conditions.

7. A contract may provide for an additional asset at the client’s option, or by

way of an amendment.
Can this be treated as an additional contract?

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IAS 11 Construction Contracts
1) No.
2) Maybe. 1) True.
2) False.
8. Contract revenue should comprise:
16. Borrowing costs can be charged to contract costs.
1) All cash flows.
2) Initial revenue agreed, plus variations, claims and incentive payments. 1) True.
2) False.
9. Variations can only increase revenue.
17. Costs incurred in securing contracts may be included in contract costs.
1) True.
2) False. 1) True.
10. Claims relate to costs included in the contract price. 2) False.

1) True. 18. Any expected loss on the contract should be:

2) False.
1) Ignored.
11. Incentive payments can be included in the revenue at the start of the 2) Recognised at the end of the contract.
contract. 3) Spread over the life of the contract.
4) Recognised immediately.
1) True.
2) False. 19. Contract costs that relate to future work on the contract:

12. Contract estimates may be revised. 1) Can be ignored.

2) Should be expensed immediately.
1) True. 3) May be treated as an asset.
2) False.
20. Advances paid to subcontractors:
13. Contract costs only include costs that relate specifically to the contract.
1) Can be ignored.
1) True. 2) Should be expensed immediately.
2) False. 3) May be treated as an asset.

14. Incidental income, such as from the sale of scrap materials, should be 21. If revenue, that has already been recognised, may not be paid, the
shown as: uncollectible amount:

1) Revenue. 1) Is deducted from revenue.

2) A deduction from costs. 2) Is recognised as an expense.

22. Stage of completion calculation: the main reference is:

15. Development costs can be charged to contract costs. 1) The client.

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IAS 11 Construction Contracts
2) Internal records.
3) The contract.

23. When the outcome of a contract cannot be estimated:

1) Revenue should not be recognised.

2) Some revenue may be recognised.
3) All revenue can be recognised.

24. Changes in estimates are:

1) Recognised in the period that the change is made.

2) Recognised at the end of the contract.
3) Ignored.

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IAS 11 Construction Contracts
($000’s. Year 1 Year 2 Year 3
10 Exercise Questions Initial amount of revenue agreed in
contract
1. The Determination of Contract Revenue and Expenses (Amounts
Variation
expressed in $000’s.
Total contract revenue
A construction contractor has a fixed-price contract for $30000 to build a
Contract costs incurred to date
tunnel. The contractor's initial estimate of contract costs is $22500. It will take
3 years to build the tunnel. Contract costs to complete
Total estimated contract costs 22500 25200 25950
By the end of year 1, the contractor's estimate of contract costs has increased
to $25200. Estimated profit
Stage of completion 33% 60% 100%
In year 3, the client approves a variation resulting in an increase in contract
revenue of $1500 and estimated additional contract costs of $750. At the end
of year 2, costs incurred include $900 for materials to be used in year 3.
The stage of completion for year 2 (60%. is determined by excluding costs
incurred for work performed to date the 900 of materials for use in year 3.
The stage of completion is determined by calculating the proportion that costs
incurred for work done so far bear to the estimated total costs.
The amounts of revenue, expenses and profit recognised in the income
A summary of the financial data during the construction period is as follows:
statement in the three years are as follows:

(Please complete the table.

(Please complete the table.

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 IAS 11 Construction Contracts
Total
($000’s. Recognised in Recognised in ($000’s. 1 2
To
prior years current year
Date Contract Revenue 4800 3000 7800
Contract Expenses 3750 3300 7050
1.1.2 Year 1 Expected Losses
- 180 180
Revenue (30,000 x 33%. -
Recognised profits less
Expenses (22,500 x 33%. - recognised losses 1050 -480 570
Profit - Contract Costs incurred in the
Year 2 period 5100 3300 8400
Revenue (30,000 x 60%. Contract Costs incurred 3750 3300 6950
recognised as contract expenses
Expenses (25,200 x 60%. in the period (as above.
Profit Contract Costs that relate to a
Year 3 future period 1350 - 1350
Revenue (31,500 x 100%. Contract Revenue (as above. 4800 3000 7800
Expenses Progress Billings 4800 2550 18000
Profit Unbilled Contract Revenue - 450 15120
Advances 750 - 750

2. Contract Disclosures

In the next example, another contractor has reached the end of its first year of
(Please complete the following table.
operations.
The amounts to be disclosed are:
Both its contracts’ costs incurred have been paid for in cash.
All its progress billings and advances have been received in cash.
Contract costs incurred for contract 2 include the cost of materials that have
been purchased for a future period.
For contract 1, the client has made an advance to the contractor for work not
yet performed.

The status of its contracts in progress at the end of year 1 is as follows:

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IAS 11 Construction Contracts
Contract revenue recognised in the period
Contract costs incurred and recognised profits
(less recognised losses. to date
Advances received
Gross amount due from clients for contract
work - presented as an asset in accordance
Gross amount due to clients for contract
work -presented as a liability

(Please Complete the following table.

The last 2 amounts above are 1 2 Total
calculated as follows:
Contract Costs incurred
Recognised profits less
recognised losses
Subtotal
Progress billings
Due from clients
Due to clients

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IAS 11 Construction Contracts
($000’s. Recognised in Recognised in
11 Solutions To
Date
prior years current year

Answers to multiple-choice questions: Year 1

Revenue (30,000 x 33%. 9999 - 9999
1. 2. 7. 2. 13. 2. 19. 3.
2. 1. 8. 2. 14. 2. 20. 3. Expenses (22,500 x .33%. 7500 - 7500
3. 3. 9. 2. 15. 1. 21. 2. Profit 2499 - 2499
4. 1. 10. 2. 16. 1. 22. 3.
5. 2. 11. 2. 17. 1. 23. 2. Year 2
6. 2. 12. 1. 18. 4. 24. 1. Revenue (30,000 x .60%. 18000 9999 8001
Expenses (25,200 x .60%. 15120 7500 7620
Profit 2880 2499 381
Answers to exercise questions:
Year 3
1. Revenue (31,500 x 100%. 31500 18000 13500
($000’s. Year 1 Year 2 Year 3 Expenses 25950 15120 10830
Initial amount of revenue agreed in 30000 30000 30000 Profit 5550 2880 2670
contract
Variation - - 1500
Total contract revenue 30000 30000 31500
Contract costs incurred to date 7500 16020 25950
Contract costs to complete 15000 9180 -
Total estimated contract costs 22500 22500 25950
Estimated profit 7500 4800 5550
Stage of completion 33% 60% 100%

The stage of completion for year 2 (60%. is determined by excluding costs

incurred for work performed to date the 900 of materials for use in year 3.

The amounts of revenue, expenses and profit recognised in the income

statement in the three years are as follows:

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 IAS 11 Construction Contracts
2.
The amounts to be disclosed are:

Contract revenue recognised in the period

7800
Contract costs incurred and recognised profits
(less recognised losses. to date 8970
Advances received 750
Gross amount due from clients for contract 1350
work - presented as an asset in accordance
Gross amount due to clients for contract
work -presented as a liability -180

The last 2 amounts above are 1 2 Total

calculated as follows:
Contract Costs incurred
5100 3300 8400
Recognised profits less
recognised losses 1050 -480 570
Subtotal 6150 2820 8970
Progress billings 4800 3000 7800
Due from clients 1350 - 1350
Due to clients - -180 -180

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IAS 11 Construction Contracts

This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of ZAO
“PricewaterhouseCoopers” and ACCA, FBK and Agriconsulting and can in no way be taken to reflect the views of the European Union

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