“Qualified collection right” means that in the case of termination of the contract due to customers or other parties, the enterprise has the right to collect funds that can compensate its incurred costs and reasonable profits for the performance part that has been completed so far, and this right is legally binding.
The 2020 annual reports of listed companies such as China Construction Research Institute, Youan design and AoYa design show that enterprises adopt the period method in revenue recognition.
According to historical experience, the customer is responsible for the engineering design services provided by the company when the design services are completed There are realistic payment obligations, and the company recognizes relevant income.
If so, they should recognize revenue according to the period method; Otherwise, it belongs to the performance obligation at a certain time point, and the revenue shall be recognized according to the time point method.
1.
“Irreplaceable” means that the enterprise cannot easily use the goods for other purposes due to contractual constraints or practical feasibility constraints.
In carrying out the above business, many links will involve the accounting treatment under the new income standard, including the selection and satisfaction conditions of income recognition period method and time point method, the determination method of performance schedule, the accounting and carry forward of contract cost, etc.
14 – Revenue stipulates that enterprises should first judge whether they perform their performance obligations within a certain period of time.
This paper intends to discuss this.
The breach clause meets the conditions of “qualified collection right”, forming the practice of the design industry.
Key words: architectural design; Time period method; Contract cost; New income standards; The classification number of the drawings in the performance schedule: F230 document mark code: a article number: 1003-286x (2022) 02-0047-03 the construction project has a large investment and a long construction period.
Although the customer will review the phased results formed by the performance of the contract, the customer cannot obtain economic benefits from it before all the design work is completed, and the project will not start substantially, that is, the customer cannot control the goods under construction (design results) in the performance process of the architectural design enterprise, which does not meet the conditions of the time period method (2); Most construction projects are personalized, and the design work is customized design, which is irreplaceable.
If the contract signed between the architectural design enterprise and the customer does not have “qualified collection right”, if only the confiscation of deposit or collection of liquidated damages is stipulated, it cannot be considered as having “qualified collection right”, and the income shall be recognized according to the time point method.
If the designer fails to start the design work, the deposit paid by the employer will not be returned; If the design work has been started, the employer shall pay half of the design fee at this stage according to the actual workload carried out by the designer; More than half shall be paid in full according to the design fee of this stage.
Therefore, architectural design enterprises usually meet the period method to recognize revenue.
The new income criterion changes from risk reward model to control right transfer control, which has an important impact on enterprise income recognition.
Abstract: income is the key index of enterprise performance evaluation.
Since the performance process of engineering design services does not meet the conditions of performance obligations to be performed within a period of time, the company regards it as the performance obligation to be performed at a certain point.
Selection of revenue recognition methods for architectural design enterprises.
For example, The revenue recognition method of design business disclosed in China Chemical’s 2020 annual report is as follows: “The service contract between the company and the customer is mainly the performance obligations such as engineering design.
As for the selection of revenue recognition methods for architectural design enterprises, the author believes that the following situations can be comprehensively considered: if the architectural design enterprise is replaced by the customer halfway, the new design enterprise often needs to re execute the design work, so the customer has not obtained and consumed the economic benefits brought by the work of the original design enterprise while performing the contract, That is, it does not meet the conditions of the time period method (1); The design enterprise generally does not work on the customer’s site.
Some design enterprises have more specific agreements with customers: during the performance of the contract, the employer requests to terminate or terminate the contract for reasons other than those agreed in the contract.
The revised accounting standards for Business Enterprises No.
Combined with the accounting treatment practice of similar listed companies, this paper discusses the relevant problems of income recognition, such as the selection and satisfaction conditions of income recognition period method and time point method, the determination method of performance schedule, the accounting and carry forward of contract cost, analyzes the main problems existing in the implementation of the new income standard by architectural design enterprises, and puts forward relevant suggestions.
The general process for architectural design enterprises to carry out design business mainly includes project planning stage, scheme design stage, preliminary design stage, construction drawing design stage and construction cooperation stage.
The scientificity, rationality, functionality and design quality of the engineering design have a significant impact on the service and life of the building, which has given birth to a number of architectural design enterprises.
In practice, it is common for architectural design enterprises to fail to meet the conditions (1) (2), while meeting the conditions of the time period method (3) (that is, the breach clause agreed in the contract supports the time period method), which is mainly reflected in: during the performance of the contract, if the customer requests to terminate the contract, if the design enterprise has not started the design work, the received advance payment will not be refunded; If the design work has been started, the customer shall pay the corresponding design fee in proportion to the actual workload completed by the design enterprise.
” Under the time period method, the methods to determine the performance progress include output method and input method..
At the same time, if the contract signed with the customer meets the conditions of “qualified collection right”, it meets the conditions of the time period method (3), and the revenue shall be recognized according to the time period method.
If one of the following conditions is met, it belongs to a certain period of performance: (1) the customer obtains and consumes the economic benefits brought by the enterprise’s performance at the same time of the enterprise’s performance; (2) Customers can control the goods under construction in the process of enterprise performance; (3) The goods produced by the enterprise in the process of performing the contract have irreplaceable uses, and the enterprise has the right to collect payment for the performance part that has been completed so far in the whole contract period, that is, the “qualified collection right”.
