A Study On The Application Of Percentage Of Completion In Real Estate Industry Under IFRS15

In 2014,IASB and FASB jointly issued IFRS 15-Revenue from Contracts with Customers.The new guidelines no longer distinguish between goods and services,but rather recognize revenue based on the transfer of control.IFRS15 also raised three criteria to judge whether the control transfers over time.This method of recognizing revenue over a period of time is similar to the percentage of completion method under the current criteria.At present,the real estate industry should recognize revenue at a point in time,according to China's "Accounting Standards for Business Enterprises No.14-income" provisions.However,there is a defect with overvalued asset size,high asset-liability ratio,large volatility in performance and outflow of cash flow and so on,which affects the accounting information value of the balance sheet and profit statement to a certain extent.Besides when the real estate business to sign the real estate construction agreement,it can be applied to the percentage method of completion.Therefore,the completion confirmation method or the completion percentage method is still discussed.This article will focus on whether the real estate industry is suitable to the percentage of completion method in IFRS15.Initially,the paper will summarize the income criteria and the industry's income recognition time of real estate development.Then,it will briefly introduce the core five-step model of IFRS15,and compare the main differences between the old and new revenue standards based on the percent complete method.After that,this paper will discuss the applicability of the percentage method under the new standard in the case of a customized business of the real estate development industry,and compares the impact between the completion confirmation method and the percentage of completion method on the key financial indicators of the case.Finally,the advantages and disadvantages of the completion confirmation method and the percentage of completion method will be analysed,and some suggestions are put forward from the three aspects of real estate development enterprise,supervision and standard setting.With a view to helping to reduce the real estate business income recognition of the controversy and challenge for the disclosure of its financial statements continue to provide a reference.