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Home Acts & Rules Direct Taxes Rules Accounting Standards U/s 145(2) Chapters List Income computation and disclosure standards - w.e.f. AY 2017-18 This
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ICDS - 03 - III - Construction contracts (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

Extract

..... or a construction contract of a contractor. Definitions 2 (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified: (a) "Construction contract" is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use and includes : (i) contract for the rendering of services which are directly related to the construction of the asset, for example, those for the services of project managers and architects; (ii) contract for destruction or restoration of assets, and the restoration of the environment following the demolition o .....

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ICDS - 03 - III - Construction contracts (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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..... xed price contracts and cost plus contracts. Some construction contracts may contain characteristics of both a fixed price contract and a cost plus contract, for example, in the case of a cost plus contract with an agreed maximum price. Combining and Segmenting Construction Contracts 5. The requirements of this Income Computation and Disclosure Standard shall be applied separately to each construction contract except as provided for in paragraphs 6, 7 and 8 herein. For reflecting the substance of a contract or a group of contracts, where it is necessary, the Income Computation and Disclosure Standard should be applied to the separately identifiable components of a single contract or to a group of contracts together. 6. Where a contract cove .....

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ICDS - 03 - III - Construction contracts (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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..... f revenue agreed in the contract, including retentions; and (b) variations in contract work, claims and incentive payments: (i) to the extent that it is probable that they will result in revenue; and (ii) they are capable of being reliably measured. 11. Where contract revenue already recognised as income is subsequently written off in the books of account as uncollectible, the same shall be recognised as an expense and not as an adjustment of the amount of contract revenue. Contract Costs 12. Contract costs shall comprise of : (a) costs that relate directly to the specific contract; (b) costs that are attributable to contract activity in general and can be allocated to the contract; (c) such other costs as are specifically chargeable to the .....

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ICDS - 03 - III - Construction contracts (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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..... ty at the reporting date. 17. The recognition of revenue and expenses by reference to the stage of completion of a contract is referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed. 18. The stage of completion of a contract shall be determined with reference to: (a) the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs; or (b) surveys of work performed; or (c) completion of a physical proportion of the contract work. Progress payments a .....

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ICDS - 03 - III - Construction contracts (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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