Section 23 Revenue incorporates the specialised requirements and considerations around construction contracts accounting.
Section 23 of IFRS for SMEs differs from IFRS 15 Revenue in terms of construction contracts accounting, in that the approach in IFRS for SMEs is based on the percentage of completion method as opposed to IFRS 15’s focus on the transfer of distinct goods and services to the customer.
This section provides guidance on how to account, not only, for the revenue but also the costs from a construction contract.
NOTE: This presentation explains the requirements of the Second Edition of IFRS for SMEs that are currently still effective and NOT the February 2025 Third Edition of IFRS for SMEs which only become effective end of 2027!
The following requirements from IFRS for SMEs Section 23 Revenue will be unpacked relative to construction contracts from the perspective of the contractor:
- Recognition based on the unique recognition principles for these types of contracts
- Measurement principles
- Costs incurred as part of construction contracts
- Onerous contracts provisions and contingent liabilities
- Presentation and disclosure.
NOTE: IFRS 15 Revenue will NOT BE DISCUSSED, nor will the new Revenue requirements from the Third Edition of the IFRS for SMEs standard!
