Workdone revenue plus#

Expected losses shall be recognized immediately as expenses. Where the result or outcome of any contract for construction can be projected, the related contract revenue and contract costs shall be recognized by taking into account the stage of completion of such contract. Other costs which are specifically chargeable to the customer under the terms of the contract Recognition of Revenue and Cost from a Contract Costs which are generally attributable and allocated to the contract activities Directly related costs that to the specific contract The cost of a contract includes the following: Claims and incentives on account of variations in contract work Costs of a Contract The initial amount of revenue agreed in the contract The revenue from a contract includes the following to the extent it is probable of generating revenue and is measurable: Segmenting of Construction contracts – Where a contract includes more than one asset, the construction of each asset should be treated as a separate construction contract when separate proposals have been given for each asset, each asset has been separately negotiated and the costs and revenues of each asset can be identified separately.įor example, a contract for construction of three different buildings on the same plot with different specifications and each building is separately negotiated with the contractor. Combining of Construction contracts – A group of contracts, either with one or more customers, shall be considered as a single construction contract when all the contracts are negotiated as a single package, are inter-linked and form part of a single project and are performed in a continuous sequence.įor example, a contract for construction of three similar buildings (similar in all aspects) on a single plot negotiated all at once. Combining and Segmenting of Construction Contracts

Workdone revenue plus#

Cost-plus ContractĪ contract in which the contractor is reimbursed for costs incurred or agreed costs, plus a percentage of these costs of a fixed fee. For example, the parties agree to include a clause in the contract for adjusting the Contract price on the basis of an increase in the cost of raw materials. In some cases, there may be an element of cost escalation clause in the contract which is mutually agreed to between the parties. Fixed Price ContractĪ contract in which the contractor agrees to a fixed contract price. their technology/design/function or the nature of their ultimate purpose or use. A Construction Contract is any contract which is entered into specifically for construction of an asset or a combination of assets that are closely inter-linked or inter-dependent w.r.t.