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Sale of property recognition

Company in the construction industry has sold property it has constructed post year end

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A company preparing accounts under FRS 105 has sold a property it has constructed post year end. Deposit received pre year end. If contracts have been signed i.e. becomes unconditional, am i correct in that it needs to be included in the current year accounts. 

Also what about a property where construction was completed before the year end and sold at a loss post year end but no contract was drafted at the year end date?

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By paul.benny
23rd Feb 2021 22:12

What do the company's accounting policies say about valuation of stock? Or for that matter about revenue on construction projects?

The accounting policies might give you a clue. Failing that you could look at the standard yourself. It can be freely downloaded from the FRC website.

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By johngroganjga
24th Feb 2021 22:37

In your first case, I think what you mean is not that the company has sold the property, but that it has entered into a binding contract to sell it at a later date. You don’t recognise the sale until it has been completed.

In your second case, you might have an impairment to recognise, but no sale until it takes place.

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