(1) The enterprise has transferred the main risks and rewards of commodity ownership to the buyer;
(2) The enterprise neither retains the right to continue management, which is usually associated with ownership, nor controls the sold goods;
(3) the economic benefits related to the transaction can flow into the enterprise;
(4) Relevant income and costs can be measured reliably.
In practice, some people think that income can be confirmed after receiving the pre-sale house payment or signing the formal sales contract.
In our opinion, this situation does not meet the requirements of the first article of the above standard and should not be confirmed. Otherwise, it is suspected of confirming income in advance.
Others believe that only the transfer of property rights can confirm the realization of income. We believe that the transfer of property rights involves many government departments, and it is only a legal form of income realization, which is also different from the real situation. It is suspected of delaying the recognition of income and does not conform to the principle that substance is more important than form. To correctly and truly confirm the income realization of real estate enterprises, the following four specific conditions should be met:
(1) The project has been completed and accepted;
(2) Having a settlement notice approved by the buyer;
(3) the obligations stipulated in the sales contract have been fulfilled, and the price has been obtained or is sure to be obtained;
(4) The cost can be measured reliably.
Under what circumstances can real estate enterprises (construction contractors) use the percentage of completion method to determine income realization? Article 95 of "Accounting System for Enterprises" stipulates that the fixed cost contract can be recognized by the completion percentage method if it meets the following four conditions:
(1) The total contract revenue can be measured reliably;
(2) The economic benefits related to the contract can flow into the enterprise;
(3) After the balance sheet date, the completion schedule of the contract and the costs to be incurred for the completion of the contract can be reliably determined;
(4) The contract cost that has occurred to complete the contract can be clearly distinguished and reliably measured, so that the actual contract cost can be compared with the previous estimated cost.
The issuance department of China Securities Regulatory Commission has also made it clear that the income of real estate enterprises can not be confirmed according to the completion percentage method, except that the sales income can be confirmed by the completion percentage method. In fact, a construction contract is required for building a property on behalf of others. To sum up, the conditions are:
(1) There is a construction contract and the contract is irrevocable;
(2) The accumulated payment of the buyer exceeds a certain proportion of the sales price (generally 50%);
(3) The remaining receivables can be recovered;
(4) The degree of completion of the development project can be reliably determined.