When accounting for a long-term construction contract under IFRS, if the percentage-of-completion method is not appropriate, the

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antoniya [11.8K]

1 year ago

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When accounting for a long-term construction contract under IFRS, if the percentage-of-completion method is not appropriate, the

seller should account for revenue using:

Business

1 answer:

IRISSAK [1] · Answer 1 · 2023-08-25T09:24:29+03:00

When accounting for a long-term construction contract under IFRS, if the percentage-of-completion method is not appropriate, the seller should account for revenue using "cost recovery method".

<h3>What is cost recovery method?</h3>

According to the "Cost Recovery Rule," any excess cash value (cost basis) over premium payments that results from a partial withdrawal of cash or a policy surrender is taxable income.

Calculation for cost recovery method includes:

the product's operating expenses, such as those for hardware, software, and labour, should all be added up.
Analyse whole revenue, regardless of whether a client made a lump-sum payment or several instalments.
To calculate the profit, deduct the cost of products from whole sales.

To know more about the lump-sum payment, here

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