Recognition of Revenue From Construction Contracts According to IFRS

Inhaltsverzeichnis (Table of Contents)

• Introduction
• Revenue Recognition under IFRS
• Purpose of International Financial Reporting Standards
• Information function
• General objective of decision usefulness
• Limited role of stewardship
• Qualitative characteristics of financial statements
• Relevance as the dominating criterion
• Reliability within the concept of faithful representation
• Enhancing qualitative characteristics
• Revenue recognition under IFRS - Two competing approaches
• Asset-liability view
• Revenue-expense view
• Inconsistencies in revenue recognition under IFRS
• Analysis of the impact of IFRS 15 on the construction industry
• Characteristics and risks related to construction and real estate
• Dispartment of construction contracts into separate performance obligations
• Identification of separate performance obligations
• Scope and definition of contracts with customers
• Distinct goods and services as the key criteria for separability
• Combined output through integrating services - A relevant exception
• Little guidance on separation of performance obligation under old revenue standards
• Satisfaction of performance obligations based on the concept of control
• Concept of control
• Distinction between different types of performance obligations
• Revenue recognition at point in time
• Revenue recognition over a period of time – Often the case of construction contracts
• Simultaneous receipt and consumption of benefits
• Performance and enhancement of an asset under customers control
• Creation of an asset with no alternative use and an enforceable right to payment
• Explanation and meaning
• Expansion of the Percentage-of-completion method- A critical evaluation
• Consequences for the sale of real estate
• Measuring progress towards completion
• Reasonable measures of progress
• Input methods experience stronger regulations under IFRS 15
• Output methods
• Capitalization of pre-contract incremental costs

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This bachelor thesis aims to analyze the theoretical and practical consequences of the transition to IFRS 15 for revenue recognition from construction contracts. It specifically examines how IFRS 15 impacts the construction industry, focusing on the new requirements for identifying and satisfying performance obligations, measuring progress towards completion, and capitalizing pre-contract incremental costs.

• The impact of IFRS 15 on revenue recognition in the construction industry.
• The identification and satisfaction of performance obligations in construction contracts.
• The measurement of progress towards completion under IFRS 15.
• The capitalization of pre-contract incremental costs under IFRS 15.
• The challenges and opportunities presented by the transition to IFRS 15 for construction companies.

Zusammenfassung der Kapitel (Chapter Summaries)

• Introduction: This chapter provides an overview of the purpose and qualitative characteristics of International Financial Reporting Standards (IFRS). It explores the two competing approaches to revenue recognition under IFRS, the asset-liability view and the revenue-expense view. It also highlights inconsistencies in revenue recognition under IFRS.
• Analysis of the impact of IFRS 15 on the construction industry: This chapter examines the characteristics and risks of the construction and real estate industries. It focuses on the new requirements for identifying and satisfying performance obligations in construction contracts, including the concept of control and the distinction between different types of performance obligations. It also delves into the measurement of progress towards completion under IFRS 15 and the capitalization of pre-contract incremental costs.

Schlüsselwörter (Keywords)

This bachelor thesis focuses on revenue recognition, International Financial Reporting Standards (IFRS), IFRS 15, construction contracts, performance obligations, control, progress towards completion, pre-contract incremental costs, and the impact of IFRS 15 on the construction industry.