Revenue recognition onconstruction contracts estate: a study of the exposure draft ed/2010/6 - contract revenues with clients

In 2010 the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) published the Exposure Draft ED/2010/6 that discusses the recognition of revenues from contracts with customers. The project arose from the need to harmonize the criteria for revenue recognition and provide better information to users. When it comes to an event long-term, revenue recognition should be better analyzed, in order to reflect adequately the transfer of goods or services between the parties. For both the Exposure Draft proposes that revenues are recognized when they met their performance obligations. One of the industries that will be directly affected by the adoption of this standard is the real estate construction. Given this fact attempted to answer the question: what is the effect caused by the approval of the Exposure Draft on revenue recognition in the sector of real estate construction? This research is characterized as exploratory as to the objectives, the literature concerning the procedures and qualitative in relation to the problem. The illustrative example presented in this paper shows that the proposal will cause significant changes in the revenue stream of real estate entities and therefore the distribution of dividends, since the revenue recognition will no longer monitor the costs involved in the contract. This fact can affect the performance evaluation of firm, influencing their market value and the cost of capital. Keywords: Revenue recognition; Construction contract; IFRS