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Recognition Of Contract Revenues And Expenses

Author

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  • Victoria Firescu

Abstract

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated with the construction contract should be recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. The contract costs are recognized as an asset provided it is probable that they will be recovered. The outcome of a construction contract can only be estimated reliably when it is probable that the economic benefits associated with the contract will flow to the enterprise. There are two methods of calculating the profits on uncompleted used by contractors: Percentage of Completion Method and Completion Contract Method.

Suggested Citation

  • Victoria Firescu, 2007. "Recognition Of Contract Revenues And Expenses," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(9), pages 1-34.
    • Handle: RePEc:alu:journl:v:1:y:2007:i:9:p:34
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    More about this item

    Keywords

    contract revenues; contract costs; recognition.;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G00 - Financial Economics - - General - - - General

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