What is Construction Contract Revenue?
Construction contract revenue is the revenue a contractor recognizes from long-term construction projects. Under IFRS 15, it is typically recognized over time, using a measure of progress such as cost-to-cost, when the customer simultaneously receives and consumes the benefits of performance.
How It Works
- Identify performance obligations in the contract.
- Determine the transaction price, including variable consideration.
- Allocate price to performance obligations.
- Recognize revenue over time based on measured progress.
Saudi Context
Saudi contractors building Vision 2030 infrastructure recognize construction contract revenue over time under IFRS 15 and disclose contract assets, liabilities and retention separately.
Example
A SAR 50 million contract that is 60 percent complete and has not recognized prior period revenue allows recognition of SAR 30 million of cumulative revenue.