During the early stages of a contract, where the outcome of a contract cannot be estimated reliably, contract revenue is recognized only to the extent of costs incurred. It may be noted that an early stage of a contract should not extend beyond 25 percent of the stage of completion.
Contract revenue recognition: recognize only costs incurred when outcome is not reliably estimable; early-stage limit applies.
When the outcome of a construction contract cannot be estimated reliably, revenue is recognized only to the extent of costs incurred, subject to an early-stage completion limit specified in the Income Computation and Disclosure Standard on Construction Contracts.
Note: It is a system-generated summary and is for quick reference only.
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