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of <h1>AS 7: Guidelines on Accounting for Construction Contracts, Revenue Recognition, and Cost Allocation Explained</h1> The Accounting Standard (AS) 7 outlines the accounting treatment for construction contracts, focusing on the allocation of contract revenue and costs to the relevant accounting periods. It defines construction contracts, including fixed price and cost plus contracts, and provides guidance on combining and segmenting contracts. The standard specifies how to recognize contract revenue, including variations, claims, and incentive payments, and details the composition of contract costs. It prescribes the percentage of completion method for recognizing revenue and expenses, addressing situations where contract outcomes cannot be reliably estimated. The standard also mandates the disclosure of contract revenue, costs, and progress in financial statements.
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