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Construction contract in China with international standards criteria for comparative analysis


1 Introduction
International Accounting Standards Board as a member of the international accounting standards to speed up coordination is imperative. For the construction industry, the WTO means that foreign capital investment projects will significantly increase, simultaneously, in accordance with the principles of the WTO, China will be more contractors in international construction markets. Therefore, more domestic contractors Lord to clinical guidelines in accordance with international construction contract the project to perform the contract as soon as construction contracts are familiar with international accounting standards, criteria with which to understand differences of construction contract to improve the performance level is necessary to improve China's international contractors competitiveness is an important practical significance.
Of Relative to the original manner consistent with international accounting standards. However, the construction contract or in the definition, types, separation and merger, revenue, costs, revenues and expenses recognized that changes in accounting estimates, the disclosure of the existence of eight different levels of different areas.
2, our construction contract with international standards criteria for comparison
2.1 on the definition of construction contracts
specifically the combination of project contracts. China's accounting standards will be defined as: an asset for the construction or in design, technology, function, and other aspects of end-use is closely related to the number of assets entered into the contract. Thus, in this respect with the international standards of accounting standards remained the same.
2.2 on the construction of the type of contract
Our traditional accounting practice, the construction enterprises in accordance with the contract revenue recognized in different settlement, there are three specific ways: ① Construction Budget cost method; ② use of certain munitions the actual cost plus a certain percentage of profits to determine the cost approach; ③ tender price way. Draws on existing international standards accounting practices,[link widoczny dla zalogowanych], will be contained in construction contracts in accordance with the risk takers were divided into fixed-price contract with cost-plus contracts. The difference is, international standards require, in some cases, fixed-price contract for the terms with the rising costs. Moreover, China's accounting standards make clear that this is not.
2.3 division on contracts and consolidation
Discrete contract is a construction contract if the number of assets involved in have certain conditions, each asset should be handled as a single contract; contract consolidation is a group of contracts, whether with a single customer or several customers, with certain conditions, should be merged into a single contract processing. Separation with the contract conditions of the merger, China's accounting standards with international standards are consistent. The difference is that IAS 11 also provides for the separation of the other conditions of a contract, the construction contract, according to the selection there or amend the terms of a construction of additional assets. When the following conditions are met, the construction of the additional asset should be treated as a separate construction contract processing. ① the additional assets and the assets involved in the original contract to design, process, function, etc. is very different; ② the agreed price of the additional assets, the original contract need not consider the price factor. This is China's accounting standards not yet covered.
2.4 on the contract revenue
income. However, China's accounting standards on the measurement of contract revenue requirements and international norms are different. Guidelines of the construction of Article 8 of the contract, contract revenue should be based on the price received or receivable measurement. Here the word The International Accounting Standard 11, paragraph 12, contract revenue should be the price received or receivable is measured at fair value.

2.5 on the contract costs
Provisions of the contract the cost of international accounting standards, including three parts: ① specific costs directly related to the contract; ② Under normal circumstances the contract can be attributed to the activities undertaken and to be allocated to the cost of the contract; ③ According to the terms of the contract Customers should have the burden of other costs. Standards of construction contract cost of the light of international standards on the content of the contract made according to the provisions of the form elements, namely: the cost of the contract should include the contract from the contract signed to be completed only occurred with the implementation of contract-related direct costs and indirect costs.
Comparison, the cost of international accounting standards on the contract constitutes a more complete presentation. For example, for borrowing costs, international standards require that the contractor in accordance with International Accounting Standard 23
In addition, the international accounting standards, in order to obtain the contract and incurred expenses directly related to the contract, if they can separate and can be measured reliably identified, but is very likely to get the contract, the contract should cost as these costs be included as part of. The provisions of accounting standards, due to contract related costs incurred, should occur directly recognized as an expense. Thus, for the treatment of the problem, pay attention to the matching principle of international accounting standards, and our guidelines for more on the robustness principle.
Of construction contract rules and international accounting standards in the confirmation of a construction contract methods of income and expenses are basically the same, tend to the relevant principles, the principle of accrual basis using the percentage of completion method, get rid of the completed contract method; According to the principle of prudence, the expected loss will be recognized as an expense.
2.7 Changes in accounting estimates on
Standards of construction contract did not make special provisions for changes in accounting estimates, the implementation of corporate accounting practice, IAS has made special provisions for this: the contract revenue and contract cost estimates the impact of changes, or changes in estimates of contract, the impact of the results, changes in accounting estimate should be accounted for. In the event of changes, should change the current and subsequent period after the changes estimated by the income statement in the amount of revenues and costs.
2.8 on disclosure
Guidelines of the construction contract provides enterprise should disclose the following matters relating to construction contracts: ① the construction contract project, a total of costs incurred and recognized cumulative gross profits (or losses); ② contract work in progress billings price amount; ③ contract revenue recognized in the period and the amount of contract costs; ④ determine the stage of completion method of contract; ⑤ total contract amount; ⑥ current expected loss for the cause and the amount; ⑦ accounts receivable in the progress of the project have not yet received section. International accounting standards should reveal the contents of the enterprise in addition to the above, but also to determine the contract revenue recognized in the current methods used and the customer should be reflected as a liability to pay the total amount of the contract works.
3, Conclusion
Accounting standards is the essence of a specification to ensure that accounting information plays in important role in the international comparable. Development of market economy requires China to accelerate the process of internationalization of accounting standards to the family into the world economy as soon as possible. At the same time we should also recognize that each country determines the accounting environment in various countries with different accounting standards can not be the same.