Research On EPC Contract Revenue Recognition Of A Construction Enterprise Under The New Revenue Standard

Tremendous changes are taking place in the current world structure.In order to better adapt to the changes of international economy and better meet the principle of accounting comparability,Chinese accounting field has also adopted a series of measures to deal with these changes.Since the 20 th century,accounting standards have been continuously revised and improved,and they have continued to converge with international standards,reducing the risks of economic trade and economic communication.The Accounting Department of the Ministry of Finance combined with China's practical problems and drew lessons from financial reporting standards,revised and issued the "Accounting Standards for Business Enterprises No.14-Revenue" on July 5,2017(hereinafter referred to as the "New Revenue Standard").The new revenue standard incorporates the original construction contract standard and the original revenue standard into the same revenue recognition model,making a huge impact on many industries.Among them,the construction industry often involves long-term and complex transactions.How to efficiently and appropriately apply the new revenue standards is a major challenge for construction enterprises.The new revenue standard integrates the original income standard and the construction contract income standard into the "five-step method" model for revenue recognition.It has a great impact on the EPC general contracting projects that construction companies may undertake.This kind of enterprise should start with the question of how to judge the relevant provisions in the guidelines.The paper firstly listed relevant domestic and foreign literature,combing and introducing the development history of accounting standards,secondly introduced the unique operating modes and business processes of construction enterprises,briefly introduced the concept and steps of EPC general contracting,and explored the relevant theoretical basis of revenue recognition and Changes in the old and new revenue standards,as well as issues such as inaccurate contract identification,unclear identification of performance obligations,and unreasonable timing of revenue recognition during construction revenue recognition were discussed.Then,the paper selected the typical construction contract of EPC general contracting project,and selected the "five-step method" in the new revenue standard as the principal line to combine the specific business operation processes and adopted the method of scenario analysis to judge the risks that should be paid attention to in each step,proposing a reasonable way of interpretation.Finally,corresponding prevention and control measures were put forward for the risks and difficulties that the case company may face when applying the new revenue standards.Based on the relevant theories and guidelines for revenue recognition,specificcase analysis is used to determine how construction companies should recognize revenue in the EPC construction contracts under the new revenue standards,providing references and guidelines for construction companies to actually apply the new revenue standards,and promoting construction companies to improve the level of judgment through the establishment of the comprehensive financial management system,avoiding estimated risks,and maintaining the healthy and stable development of EPC construction projects of construction enterprise.