What criteria should be implemented for the construction contract income of construction enterprises

For construction enterprises, the project contract income is commonly referred to as "operating income", operating income is the main component of enterprise profits, "Accounting Standards for Business Enterprises - Income", "Accounting Standards for Business Enterprises - Construction Contracts" and "Accounting System for Business Enterprises" have specific provisions on the classification, recognition, measurement and accounting of operating income.

Construction (construction) contract income refers to the income obtained by enterprises by signing construction (construction) contracts and designing and constructing houses, roads, bridges, dams and other buildings, as well as ships, aircraft, large machinery and equipment, etc., for customers according to the requirements of the contract. Among them, the contracts signed by construction enterprises for the design and construction of houses, roads and other buildings are also called construction contracts, and the income obtained according to the requirements of the contract is called construction contract income.

i) If the results of the contract can be reliably estimated, the contract revenue for the current period shall be recognized on the basis of the percentage of completion method at the balance sheet date.

ii) The outcome of the contract cannot be reliably estimated.

If the contract cost can be recovered, the contract revenue shall be recognized according to the actual contract cost that can be recovered, and the contract cost shall be recognized as an expense in the period in which it is incurred.

2.If the contract cost cannot be recovered, the expense shall be recognized immediately when it is incurred, and the revenue shall not be recognized.

3.If the uncertainties that make it impossible to reliably estimate the outcome of the construction contract cease to exist, the income related to the construction contract shall be recognized in accordance with the provisions on the recognition of revenue from the construction (construction) contract at the balance sheet date. If the estimated total cost of the contract exceeds the total revenue of the contract, the estimated loss shall be recognized as a current expense.

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Answer]: b, d, e

The income from the construction contract consists of two parts: the initial income stipulated in the contract and the income due to contract changes, claims, awards, etc.

Answer]: b, d, e

This question examines the recognition of revenue from construction (construction) contracts. The income from construction and deficiency includes two parts: the initial sales income stipulated in the contract and the income generated by contract variations, claims, awards, etc.

Legal analysis: According to the requirements of the Ministry of Finance, the new revenue standard or Cai Hui 2017 No. 22 will come into force on January 1, 2018 for enterprises listed at home and abroad at the same time, as well as enterprises listed overseas and preparing financial statements using IFRS or accounting standards for business enterprises, other domestic listed enterprises will come into force on January 1, 2020, and non-listed enterprises that implement the accounting standards for business enterprises will come into force on January 1, 2021.

Legal basis: Civil Code of the People's Republic of China

Article 793: If the construction contract is invalid, but the construction experience is qualified, the contractor may be compensated by referring to the agreed discount of the project price in the contract.

Article 800 Where the contractor subcontracts or illegally subcontracts a construction project, the employer may terminate the contract. If the main building materials, building components and equipment provided by the employer do not meet the mandatory standards or fail to perform the obligation of assistance, resulting in the contractor being unable to carry out the construction, and the contractor fails to perform the corresponding obligations within a reasonable period of time after being reminded, the contractor may terminate the contract. After the termination of the contract, if the quality of the completed construction project is qualified, the employer shall pay the corresponding project price in accordance with the agreement; If the quality of the completed construction project is not up to standard, it shall be dealt with with with the provisions of Article 793 of the Benna's Law.

Legal Analysis: The Construction Contract Guidelines provide that if the outcome of a construction contract can be reliably estimated, the enterprise should recognise contract revenue and contract expenses at the balance sheet date in accordance with the percentage of completion method. The percentage of completion method refers to the method of recognizing revenue and expenses according to the progress of contract completion.

Legal basis: Article 465 of the Civil Code of the People's Republic of China Contracts established in accordance with law are protected by law. A contract established in accordance with law shall only be legally binding on the parties, unless otherwise provided by law.

Answer]: B The income of the construction of the jujube hand includes: the initial income of the contract (the total amount of the contract), the income from the change of the contract, the income from the claim, and the income from the reward.

1) Enterprises listed both domestically and overseas, and enterprises listed overseas that prepare financial statements using IFRS or Accounting Standards for Business Enterprises, will be subject to the new revenue standard from 1 January 2018;

2) For other domestically listed companies, the new revenue standard will be implemented from 1 January 2020;

3) For non-listed enterprises that implement the Accounting Standards for Business Enterprises, the new revenue standards will be implemented from January 1, 2021;

4) Allow businesses to implement the new revenue guidelines in advance. Enterprises that implement the new revenue guidelines will no longer implement the original revenue guidelines and construction contract guidelines, as well as the original revenue guidelines guidelines.

Neither process takes VAT into account, and the main differences between the two are as follows:

1) The Engineering Construction account is replaced by the Contract Performance Cost account, and in order to facilitate accounting, construction enterprises can set up Engineering Construction Detailed Account under the latter.

2) The project settlement account is replaced by the contract settlement - price settlement account, and the credit amount indicates the project quantity that has been completed and recognized by the employer.

3) The provision for decline in the value of inventories is replaced by the provision for impairment of contract performance costs.

4) When revenue and cost are recognized according to the performance progress, they are carried forward from the debit side of the Contract Settlement - Revenue Carryover account and the credit side of the Contract Performance Cost account, respectively. This is completely different from the fact that the project of the Engineering Construction and Construction Settlement accounts under the original construction contract standard was not carried forward until completion.

5) The project construction - contract gross profit account is cancelled, and the corresponding content is directly entered into the income statement.

6) The prepayment paid by the employer shall no longer be accounted for through the account of advance receivables, but shall be included in the account of contract liabilities.

Accounting entries for recognized revenue carry-forward costs of construction enterprises.

1.When a construction business incurs costs:

Borrow: Project Construction - Contract Cost.

Tax Payable - VAT - Input Tax.

Credit: Bank deposits.

2.When the construction enterprise issues an invoice to the construction unit or receives the quantity valuation bill confirmed by the construction party:

Debit: Accounts receivable.

Credit: Project settlement.

Tax Payable - VAT - Output Tax.

or tax payable - tax on behalf of resellers.

3.When the construction enterprise recognizes the current contract revenue, contract expenses and contract gross profit:

Borrow: Cost of main business.

Construction - Contract Gross Margin.

Credit: main business income.

4.After the completion of the final accounts of the project, the balance of the engineering construction account and the project settlement account shall be hedged

Borrow: Project settlement.

Credit: Construction - Contract Cost - Contract Gross Profit.

After the completion of the project, the current income and cost shall be recognized by deducting the revenue and cost recognized in the previous year according to the final account documents.