In our practice, we often come across cases where construction companies, which are working on contracts lasting more than one year, report these contracts without applying the “Stage of completion of contracts in progress” method provided for in the National Accounting Standard 11 Construction Contracts.
Under this method, during each reporting period, revenues and expenses related to the construction contract are recognized by comparing the stage of completion of the contract with the date of the financial statements.
In violation of the accounting and tax legislation, these companies recognize all revenues from the construction contract only in the financial statements for the year of completion of the contract, and in the statements for previous years such revenues are missing. This way of accounting misstates the information in the financial statements and leads to incorrect determination of the corporate tax.
At MGI Delta, we believe that a suitable solution can be found for any complex accounting issue, as long as you have a good partner by your side. Contact our experts for a consultation or meeting.