A real estate sale : a construction contract or a sales contract?
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Title
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A real estate sale : a construction contract or a sales contract?
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Description
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When considering the sale of property (real estate), two points of time become relevant, the date the sales contract is signed or alternatively the date that the contract is completed and the legal title passes to the buyer. It is likely at the time of signing the contract that all material information relating to the contract will be known, e.g. the selling price and related expenditure. Therefore, in the absence of any uncertainty, it would be possible to recognize the revenue from the disposal of the property at the time the contract is signed. Recognition of a real estate sale is however complicated when the contract to purchase the real estate is signed prior to, or during the construction of that real estate. The question is whether the contract signed still falls within the scope of IAS 18 (AC 111). To address this situation the International Financial Reporting Interpretations Committee (IFRIC) of the International Accounting Standards Board (IASB) has issued a draft interpretation note addressing real estate sales and when these sales fall within the scope of IAS 18 (AC 111), Revenue, or IAS 11 (AC 109), Construction Contracts. This was issued by SAICA for comment as ED 226.
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Creator
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Coetzee, Stephen
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Schmulian, Astrid
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Date
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2008-05-05T08:34:46Z
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2008-05-05T08:34:46Z
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2008-01
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Type
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Article
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Format
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673659 bytes
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application/pdf
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application/pdf
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Identifier
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Coetzee, S & Schmulian, A 2008, 'A real estate sale: a construction contract or a sales contract?', Accountancy SA, pp. 12-15. [http://www.accountancysa.org.za/]
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0258-7254
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http://hdl.handle.net/2263/5101
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Language
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en
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Rights
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South African Institute of Chartered Accountants