Contingent contractual consideration requires an enforceable accrued right, while project costs follow corresponding revenue recognition under percentage completion.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Under the mercantile system, contingent contractual consideration does not accrue merely because it is stated in an agreement; taxable income requires a vested, unconditional and enforceable right and a corresponding debt due. Where a contractual tranche depends on conditions, step-in rights and deductible costs, uncertainty over receipt and quantification prevents real income from accruing. Accounting Standard-9 requires reasonable certainty of ultimate collection, while later recovery proceedings may corroborate existing uncertainty. Under the percentage completion method, project expenditure carried in work-in-progress may be claimed when corresponding revenue is recognised, provided it relates to the project and is not deducted twice.....