Phased
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Phased revenue recognition, as outlined in IFRS 15, is primarily applied to long-term contracts, such as construction projects that extend over an extended period, like building a villa over 12 months. Under this approach, revenue and costs are recognized progressively based on the contract's completion stage rather than solely upon invoicing. While partial revenue can be recorded as a contract asset, it cannot be classified as receivables until all contractual obligations are met. Only then can an invoice be issued and recognized.
This method is not exclusive to construction companies; it also applies to service providers with long-term contracts. Instead of recognizing revenue and costs only upon invoicing, this approach allows revenue to be recorded in alignment with the contract's progress, capturing different phases of completion.
To set up phased revenue recognition, you need to:
- Go to Administration > General Settings > Enable Phased Revenue Recognition.
- https://portal.firstbit.ae/~tQSEK
- Access the specific contract > Terms tab > activate Phased Revenue Recognition
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