. 9 7
ANNUAL
REPORT
20 1 7
THE BE ST
I N US
NOTESTOTHE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
2.
SUMMARYOF SIGNIFICANTACCOUNTINGPOLICIES (CONT’D)
2.17
Constructioncontractsand revenue
(a)
Constructioncontracts
The Group principally operates fixed price contracts. Contract revenue and contract costs are
recognised as revenue and expenses respectively by reference to the stage of completion of the
contract activityat theendof the reportingperiod (thepercentageof completionmethod),when the
outcomeof a constructioncontract canbeestimated reliably.
When theoutcomeof a construction contract cannot be estimated reliably (principally during early
stages of a contract), contract revenue is recognised only to the extent of contract costs incurred
that are likely tobe recoverableandcontract costs are recognisedas expense in theperiod inwhich
they are incurred.
An expected loss on the construction contract is recognised as an expense immediatelywhen it is
probable that total contract costswill exceed total contract revenue.
In applying the percentage of completion method, revenue recognised corresponds to the total
contract revenue (asdefinedbelow)multipliedby theactual completion ratebasedon theproportion
of total contract costs (as definedbelow) incurred todate to theestimatedcosts tocomplete.
Contract revenue – Contract revenue corresponds to the initial amount of revenue agreed in the
contract and any variations in contract work, claims and incentive payments to the extent that it is
probable that theywill result in revenue; and they canbe reliablymeasured.
Contract costs –Contract costs include costs that relate directly to the specific contract and costs
that are attributable tocontract activity ingeneral andcanbe allocated to thecontract.
Contracts in progress at the balance sheet date are recorded in the balance sheet at cost plus
attributable profit less recognised losses, net of progress billings and allowance for foreseeable
losses, and are presented in the balance sheet as “Gross amount due from customers for contract
work-in-progress” (asanasset)or as “Grossamountdue tocustomers forcontractwork-in-progress
(as liability) as applicable.
Progress billings not yet paid by the customer are included in the balance sheet under “Trade and
other receivables”. Amounts received before progress billings are included in the balance sheet, as
“Trade andother payables”.
