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Sunday 31 August 2014

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IFRIC 15 Agreements for the Construction of Real Estate

Draft Interpretation and Comment letters


 

Draft Interpretation and Comment letters


 

The International Financial Reporting Interpretations Committee (IFRIC) has released for public comment a draft Interpretation, IFRIC D21 Real Estate Sales. The proposal is open for public comment until 5 October 2007.

The comment period is now closed

The proposed Interpretation aims to standardise accounting practice among real estate developers for sales of units, such as apartments or houses, ‘off plan’, ie before construction is complete.

At present, real estate developers interpret International Financial Reporting Standards (IFRSs) differently and record revenue for the sale of the units at different times. Some record revenue only when they have handed over the completed unit to the buyer, while others record revenue earlier, as construction progresses, by reference to the stage of completion of the development.

IFRIC D21 proposes that revenue should be recorded as construction progresses only if the developer is providing construction services, rather than selling goods (completed real estate units). It proposes features that indicate that the seller is providing construction services. In many countries, these features tend currently not to be present in typical off plan sale agreements.

View all the comment letters.