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Real Estate Ventures and Construction Contractors Checklists and Illustrative Financial Statements

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Description

Are you confident that your Real Estate Venture and Construction Contractor financial statements and related note disclosures conform to generally accepted accounting principles? These checklists and illustrative financial statements will help you consider all the relevant requirements with a clear presentation that you can understand. You'll also find the helpful guidance you're accustomed to now fully conformed to the FASB Accounting Standards Codification™ (ASC), along with a clear explanation of the ASC's significance to the profession, numerical referencing system, and Internet-based research system.

Whether you are preparing financial statements and reports for Real Estate Ventures or Construction Contractors or auditing, reviewing, or compiling those financial statements, this practice aid can save countless research hours with its comprehensive guidance for determining the adequacy of disclosures and required supplementary information. This practice aid also provides you with illustrative financial statements and auditor's reports.

The checklists have been updated to reflect authoritative pronouncements and interpretations issued as of September 30, 2009, including:

  • FASB Accounting Standards Update (ASU) No. 2009-06, Income Taxes (Topic 740)—Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities.

  • FASB ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value.

  • SFAS No. 167, Amendments to FASB Interpretation No. 46(R)

  • SFAS No. 166, Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140
  • SFAS No. 165, Subsequent Events (FASB ASC 855)

This checklist supplement and illustrative financial statements should be used in conjunction with the Checklists and Illustrative Financial Statements for Corporations

This practice aid has been prepared by the AICPA staff and has not been reviewed, approved, disapproved, or otherwise acted on by any senior technical committee of the AICPA.

Table of Contents

Excerpts

Content refers to previous edition

Description

    .01 The range of size and sophistication of companies in the construction industry has produced a variety of construction-type contracts and types of business enterprises that use them.

    .02 The organizational structure, resources, and capabilities of contractors tend to vary with the type of construction activity.

    .03 Common accounting and reporting practices by contractors include the following:

  • The predominant practice is to present balance sheets with assets and liabilities classified as current and noncurrent on the basis of one year or the operating cycle. An unclassified balance sheet is also acceptable.

  • Costs and estimated earnings in excess of billings are classified as current assets, and billings in excess of costs and estimated earnings are classified as current liabilities.

  • Net debit balances for certain contracts should not be offset against net credit balances of other unrelated contracts.

  • Contractors frequently participate in joint ventures and have investments in corporations and general or limited partnerships. These may be reported as investments or combined or consolidated in the financial statements, depending on the various factors that dictate the applicable accounting treatment.

  • Generally, when estimates of costs to complete and extent of progress toward completion of long-term contracts are reasonably dependable, the percentage-of-completion method of contract accounting is preferable. When lack of dependable estimates or inherent hazards cause forecasts to be doubtful, the completed-contract method is generally preferable. The two methods should be used in specified circumstances and should not be used as acceptable alternatives for the same circumstances.

  • The method of revenue recognition should be disclosed.

  • A provision for losses on a contract should be made as soon as the losses become evident, regardless of the method of accounting for the contract. Provisions for losses on contracts should be shown separately as liabilities on the balance sheet, if significant, except in circumstances in which related costs are accumulated on the balance sheet, in which case the provisions may be deducted from the related accumulated costs. In a classified balance sheet, a provision shown as a liability should be shown as a current liability.

  • Contractors are encouraged to present backlog information.

Note: This publication was extracted from sections 5000 through 5300 of the AICPA Financial Statement Preparation Manual (FSP).

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Paperback 2009
Product# 0089209
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