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Hello Mike,
So far what I learned from your construction contracts tutorial was from contractor’s view point. However, I am curious to know how is the Accounting treatment from perception of the client. Especially, in regards with the perspection of National Oil companies, who have many contractors working for them on multiple construction projects. Do the clients treant the costs of construction in the same manner as the revenue recognised by the contractor or is there a difference in accounting treatment?
Thank you 🙂
Hi
Well, this is the second question this week that I have never been asked before. As it happens, I don’t believe that construction contract accounting from the perspective of the client is within the bounds of your syllabus (maybe that’s why I’ve never been asked before!)
I believe that I’m correct in saying that, where large entities like oil entities engage the services of sub-contractors, they account for the cost of those sub-contractors as direct costs of either production or costs involved in construction of assets
But it’s not in your syllabus!
Thank’s Mike. Yes, I am well aware that it ain’t a part of the syllabus, but it was a question out of general curiousity.
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