GUIDANCE NOTE ON RECOGNITION OF REVENUE BY REAL ESTATE DEVELOPERS

According to the Guidance Note, revenue in the case of real estate sales should be recognized when all the following conditions are satisfied:

• seller has transferred to the buyer all significant risks and rewards of ownership and the seller retains no effective control of the real estate to a degree usually associated with ownership;
• no significant uncertainty exists regarding the amount of the consideration that will be derived from the real estate sales; and
• it is not unreasonable to expect ultimate collection

The determination of point of time when all significant risks and rewards of ownership are transferred depends on the facts and circumstances of each case considering the terms and conditions of agreement.