The lower revenue and net operating profit over half-year 2008 figures of AED 8,126 million ($2,212 million) and AED 3,011 million ($820 million), respectively are attributed to the overall economic slowdown following the global economic crisis, and Emaar's new revenue recognition policy based on completed contract method
As of January 1, 2009, Emaar has revised its revenue recognition policy based on the new recommendation of the International Accounting Standard Board (IASB) relating to the International Financial Reporting Interpretations Committee (IFRIC) 15 - Agreements for the Construction of Real Estate, to recognize revenue based on completed contract method
The company said the change resulted from one contract that was recorded on the percentage-of-completion method rather than the completed contract method
, but the adjustment did not change reported gross margin, loss per share or cash balances.
We were involved in one matter related to a company's use of the completed contract method
of tax accounting.
COMPARISON OF MCDERMOTT'S PERCENTAGE-OF-COMPLETION RESULTS AS REPORTED TO COMPLETED CONTRACT METHOD
OF ACCOUNTING ON FIVE LOSS GENERATING EPIC PROJECTS (1) (UNAUDITED, $ MILLIONS) McDermott Expected Annual difference to Results if reported results if McDermott Reported Completed Contract Completed Contract Results (2) Accounting Accounting Used Pre-tax Pre-tax Pre-tax Full Income/ Income/ Income/ Year Revenue (Loss) Revenue (Loss) Revenue (Loss) 2001 $1,888.
Exempt methods commonly used to account for home construction contracts include the completed contract method
(CCM) and the accrual method.
lt;p>In the case of completed contract method
of revenue recognition, the revenue and related profit for a project sold can only be recognised when the project is handed over to the customers.
This total will differ from monthly drilling days considered in determining revenues and expenses for financial reporting purposes because the Company uses the completed contract method
of accounting on turnkey contracts for financial statement purposes.
We recognize sales under the completed contract method
, and our product manufacturing time from engineering to shipment on major jobs exceeds ninety days.
In a line of cases in the 1980s, the IRS tried to deny use of LIFO to users of the completed contract method
(CCM), but the Tax Court rejected those efforts.
A taxpayer may use the completed contract method
to determine the taxable income for a long-term construction contract if - the taxpayer estimates that the contract will be completed within 24 months; and - the taxpayer's average annual gross receipts, for the three tax years preceding the tax year in which the contract is entered into, do not exceed $10 million (Sec.
Recent Developments Concerning the Completed Contract Method