MINISTRY OF EDUCATION AND TRAINING

MINISTRY OF FINANCE

ACADEMY OF FINANCE

TRAN THI NGOC ANH

ACCOUNTING REVENUE, COSTS AND DETERMINING
BUSINESS RESULTS OF CONSTRUCTION ACTIVITIES
IN CIVIL CONSTRUCTION ENTERPRISES IN HANOI

Major : Accounting
Code

: 9.34.03.01

SUMMARY OF ECONOMIC THESIS

HANOI - 2021


The dissertation has been completed
at The Academy of Finance

Supervisors:

1. Prof., Dr. Doan Xuan Tien
2. Dr. Le Thi Dieu Linh

Reviewer 1:

.......................................................
......................................................

Reviewer 2:

.......................................................
......................................................

Reviewer 3:

.......................................................
......................................................

The dissertation will be defended at the Approval and grading
of the dissertation at the Academy level, the Academy of Finance
At...... hour..... date....... month..... year........

Dissertation can be found at the National Library
and the Library of the Academy of Finance


1
INTRODUCTION
1. Rationale
Basic construction especially civil construction is in the industry that produces material
and technical foundations for the national economy. Annually, construction investment in the
basic construction industry accounts for about 35% of the country's investment capital, of which
civil construction accounts for a relatively high proportion in the industry's value structure.
According to FPTS's report, infrastructure construction accounts for 41.2% of the industry

value, civil construction accounts for 40.6% and the rest is industrial construction. With large
investment capital, long construction time, large scale, products are high-value projects… It can
be said that civil construction has important economic significance in each country. In the past
time, the construction industry has experienced a significant decrease due to the impact of the
economy, the growth rate in the period 2000-2009 reached 9.6%/year, in the period 2010-2013
reached 4.6%/year. However, with the amendment of the Housing Law in 2014 and policies to
support demand stimulation, the real estate situation is having positive changes, followed by the
rise of the civil construction segment. However, along with the development of the economy,
these changes also set a level playing field for all businesses not only in the country but also
expanded to foreign enterprises. This will create development opportunities for businesses in the
economy and but also bring challenges for businesses. Vietnam is currently in the period of
deeper and deeper economic integration, in order to be able to approach and compete with
construction enterprises in the region and internationally, construction enterprises in general
need significant changes, especially in accounting.
Over the years, the Vietnamese accounting system, in which cost, revenue and business
results accounting in particular has been built and perfected in accordance with international
standards. However, besides the remarkable achievements, there are still certain limitations that
create difficulties for enterprises to apply in practice, especially for civil construction
enterprises. In fact, the accounting for revenue, costs and results in construction enterprises still
has many shortcomings, is not consistent with current accounting practices and standards, and
does not meet the accounting requirements in the business. Karma. These inadequacies
significantly affect the results of production and business activities as well as reduce the
competitiveness of construction enterprises.
Starting from the theory and practice of construction activities and on the basis of urgent
requirements of civil construction companies in the conditions of the market economy and
international economic integration, the author has selected to choose the topic: "Accounting
revenue, costs and determining business results of construction activities in civil construction
enterprises in Hanoi".
2. Overview of related research topics
Reviewing the research works so far in the country and internationally, it can be seen that

the number of research works on construction accounting is quite rich in both theory and
practice, referring to many different aspects under many approaches. However, the number of
studies on revenue and cost accounting and determining business results of civil construction
activities is limited. Research works have not been in-depth in approaching revenue and cost
accounting and determining business results under contracts. Therefore, it is necessary to have a
specific study on the actual situation of revenue and cost accounting and determine the
construction business activities in the civil construction enterprises.
3. Research purpose of the thesis
Theoretically
- Clarifying the general theoretical issues of revenue and cost accounting and determining
business results according to transactions and contracts


2
- Learn the characteristics of construction activities that affect revenue and cost accounting
and determine the business results of construction activities, especially civil construction
activities.
In terms of practice
- Researching and surveying the current status of revenue and cost accounting and
determining business results in civil construction enterprises in Hanoi, evaluating the achieved
results, analyzing and specifying limitations. and inadequacies need to be completed and
supplemented in the accounting of revenue, costs and business results of construction activities
under contract.
- Provide solutions to improve revenue, cost and business results accounting in civil
construction enterprises in Hanoi to help businesses operate more efficiently.
4. Research question
- What is the general theoretical basis for accounting for revenue and expenses and
determining business results of construction activities?
- How does the characteristics of construction enterprises affect revenue and cost
accounting and determine the business results of construction activities?

- Actual situation of revenue and cost accounting and determination of construction
business results in civil construction enterprises in Hanoi
- How to improve the contents of revenue and cost accounting and determine the business
results of construction activities in the civil construction enterprises in Hanoi in accordance with
current trends?
5. Object and scope of the thesis's research
Research subjects:
The thesis researches on revenue and cost accounting and determination of business results
of construction activities in construction enterprises, specifically: determination of contract, time
of recognition, method of determination and recognition, accounting and presentation of
information in financial statements
Research scope
- The scope of limited activities: The thesis only delves into the study of construction
activities in civil construction enterprises in Hanoi. Surveyed construction enterprises are
considered from the perspective of contractors, including main contractors and subcontractors,
superior and subordinate companies. The thesis does not delve into other investment activities
of civil construction enterprises in Hanoi such as real estate business or other activities…
- Scope of research content: Due to the time and limitation of a doctoral thesis, the author
only delves into the content of revenue and cost accounting and determines the business results
of construction activities under Financial accounting is not studied from the perspective of
management accounting.
- Spatial scope: the thesis only focuses on studying civil construction enterprises in Hanoi,
including corporations, subsidiaries, joint stock companies, limited companies...
- Time range: the data is studied from 2016 to 2020, a period when the civil construction
segment is growing strongly.
6. Research Methods
The thesis applies the methodology of dialectical materialism combined with the basic
theories of economic science to study theoretical and practical issues.
a. Methods of information collection
- Secondary data collection method

- Primary data collection method
b. Data collection and analysis methods


3
7. Scientific and practical significance of the thesis
The first is about science: research thesis, systematize the theoretical basis of revenue and
cost accounting content and determine construction business results in civil construction
enterprises in Hanoi under the following conditions: two perspectives according to the
transaction and according to the construction contract.
Second in terms of practice: The thesis analyzes and evaluates the situation and reality of
revenue and cost accounting and determines the business results of construction activities in
construction enterprises in Hanoi. advantages, limitations, causes of these limitations in revenue
and cost accounting and determination of business results. From there, propose suggestions and
solutions to improve the accounting of revenue and costs and determine the business results of
construction activities in civil construction enterprises in Hanoi. At the same time, the
conditions for the implementation of the above solutions are provided to help construction
businesses operate more effectively.
8. Structure of the thesis
In addition to the introduction, conclusion, list of references, appendices, the content of the
thesis is structured into 3 chapters:
Chapter 1: Theory of revenue and cost accounting and determination of business results in
civil construction enterprises
Chapter 2: Actual situation of revenue and cost accounting and determination of
construction business results in civil construction enterprises in Hanoi.
Chapter 3: Completing revenue and cost accounting and determining business results of
construction activities in civil construction enterprises in Hanoi.
Chapter 1
THEORY ON ACCOUNTING REVENUE, COSTS AND DETERMINATION
BUSINESS RESULTS OF CONSTRUCTION ACTIVITIES IN

CONSTRUCTION ENTERPRISE
1.1 Construction activities and characteristics of civil construction activities affect
revenue and cost accounting to determine business results
1.1.1. Concept and classification of construction activities
Construction activities include formulation of construction planning, formulation of work
construction investment projects, construction survey, work construction design, work
construction, construction supervision, manage construction investment projects, select
contractors in construction activities and other activities related to work construction.
Construction works are products created by human labor, construction materials and
equipment installed in the works, linked and positioned with in the soil, which may include
underground, above-ground parts. land, below water and above water, built according to design.
Construction works include civil works, industrial works, traffic works, water works, energy
and other works.
Construction works include
- Civil works
- Transport works
- Irrigation works
1.1.2. Characteristics of civil construction activities affect revenue and cost accounting
and determine business results
Construction operation features:
Firstly, construction products are large-scale constructions and architectural objects with
complex and unique structures. For each project, construction enterprises must sign one or


4
several construction contracts after winning the bid (or being appointed as a contractor). Each
contract includes a full estimate including design estimate and construction estimate
Secondly, unlike manufacturing enterprises, the operation process is oriented according to
the production process, for construction enterprises construction activities are oriented according
to each construction contract.

Thirdly, construction products are sold according to the estimated price or the price agreed
with the investor (the bidding price). This price is shown right on the Construction Contract at
the time of signing the contract. The manufactured product does not need to find a market to sell
the product.
Fourthly, construction products from commencement to completion and handover to use
often take a long time, depending on the scale and technical complexity of each construction
contract.
Fifthly, in construction enterprises, production and business are organized according to the
contract mechanism, which is widely applied. Construction enterprises will contract
construction products to affiliated companies or construction teams. This is a form of attaching
responsibilities and benefits to employees.
Characteristics of construction activities affecting revenue and cost accounting and
determining business results:
Firstly, before construction, there must be a detailed estimate of the revenue and expenses
incurred for each contract. This is the basis for determining the bid price for each project and
work item. The accounting for revenue and expenses and the determination of business results
must be associated with estimates of revenues and costs. .
Secondly, because the construction product is a single unit, has a complex scale and
structure, so each Construction Contract is coded separately. The collection of revenue and
expenses and determination of business results shall be performed by accounting according to
each construction contract or each work or work item. Revenue and expenses of any project will
be collected directly for that project. The costs related to construction activities are often
incurred more than other production and business activities.
Thirdly, due to the construction time is often long. A Construction Contract can last from a
few months to several years, so the time to recognize revenue, costs and determine business
results does not have to wait until the project is completed and handed over to be recognized.
which is recognized in stages consistent with the progress of the contract.
1.1.3. Construction contract, construction contract classification
Construction contract (construction contract): is a civil contract agreed in writing between
the principal and the contractor to perform part or all of work in construction investment

activities.
Classification of Construction Contracts
- In the form of a contract
- According to the relationship of the parties to the contract
- According to the way to calculate the price
1.1.4. Characteristics of construction contracts affect revenue and cost accounting and
determine business results
Firstly, determine when to recognize revenue and expenses and determine business results.
Each construction project must sign a separate construction contract. The duration of the
Contract may be for one accounting year or for many other accounting periods. Therefore,
determining when to recognize revenue and expenses and determining business results depends
on how accountants approach revenue and costs and determine from what angle the business
results according to the contract. translation or contract.


5
Secondly, the method of determining revenue, costs and determining business results.
Depending on the time to complete the contract and the commitment under the contract as well
as the approach of the Enterprise, the method of determining revenue, costs and determining
business results will be different. The method of determining revenue and expenses can be
according to the completed work method or according to the contract completion schedule.
Thirdly: Revenue and cost accounting methods and determination of business results.
Depending on the object of collection, the methods of accounting for revenue and expenses and
determining business results of construction activities in construction enterprises are different.
The management mechanism of enterprises is mainly based on the contracting mechanism
through contracts, therefore, the accounting of revenue, costs and determination of business
results depends on the level of management decentralization. and accounting of each Enterprise.
Fourthly: Presenting information on financial statements. The presentation of information
in the financial statements also depends on whether the entity determining the revenues, costs
and results of business of the Enterprise is business or contractual obligations.

1.2. Concepts, content of revenue, costs and business results of construction activities
1.2.1. Concept and content of business results of construction activities
There are many different theories and methods for measuring seizure activity. Each
accounting theory has its own views on the nature and methods of determining performance in
accordance with established concepts and principles.
Measuring the performance of an entity is a very important function of accounting.
Information about an enterprise's operating results, which is used to determine revenue, cost and
business results, is useful to different users of information in the following main aspects:
Information about the accounting results is the basis for implementing the distribution
policy, including distributing to shareholders in the form of dividends and retained earnings in
order to develop the operating scale of the unit. In addition, the accounting performance is the
basis for determining corporate income tax liability.
It can be said that there are many different ways to determine business results, according to
the author, there are basically two ways of determining business results.
- Income is the increase in the value of an entity which is determined by the value of net
assets at the end of the period from the value of net assets at the beginning of the period,
excluding direct changes in net assets due to owners. capital contribution or withdrawal. This is
an approach based on static accounting.
- Business results are determined based on economic transactions generating income and
expenses. These are approaches based on entity theory and dynamic accounting. Accordingly,
income and expenses are recognized according to the matching principle and the performance
principle. The results of operations do not include fluctuations in the value of assets and
liabilities due to events unrelated to the operations of the entity.
However, in this thesis, the author only studies the business results of construction
activities in the civil construction unit based on the second determination: comparison between
revenue and cost. The determination of revenue from construction activities is based on the
determination of revenue from construction activities and determination of construction costs.
Therefore, the content of determining business results of construction activities is also
determined based on the content of revenue and expenses of construction activities.
1.2.2. Concept, content of revenue from construction activities

• The concept of revenue from construction activities
Based on the concept of revenue, the author thinks that construction revenue has the
following characteristics:


6
- Revenue from construction activities is the increase in the total value of economic
benefits for construction enterprises through construction contracts.
- Manifested through an increase in assets or a decrease in liabilities, indirectly
increasing equity.
• Content of revenue from construction activities
Revenue of a construction contract includes:
(a) Initial revenue recognized in the contract
(b) Changes in contract performance, incentives and other amounts that
+ Ability to bring in revenue
+ They can be reliably identified
Revenue is determined by the fair value of the amount received or to be received. The
determination of revenue is affected by many uncertainties as it depends on future events such
as design changes from the contract, changes in the prices of inputs, the investor's delay in the
acceptance of the completed volume…that's why it is very necessary to ensure good input
factors and construction on schedule. To be able to limit the adverse effects that can reduce
revenue is one of the top requirements of managers.
1.2.3. Concept and content of construction activity costs
The concept of construction operating costs
From the cost concepts, the author believes that construction operating costs have the
following characteristics:
• Construction operating costs are the reduction in the value of economic benefits for
construction enterprises through construction contracts.
• Manifested through a decrease in assets or an increase in a liability, indirectly
reducing equity.

Contents of construction costs
Expenses incurred in the period are recorded according to each construction contract (each
work, work item). Construction contract cost is one of the factors affecting the determination of
business results of civil construction enterprises. Expenses that are allowed to be included in the
cost of a construction contract include:
Costs directly related to the construction contract
General expenses related to the operation of Construction Contracts and can be allocated
to each contract and each obligation in the Contract.
Other costs incurred outside the initial contract accepted by the investor to be paid will
also be included in the Construction Contract.
Expenses that are not related to the operation of the contract or cannot be allocated to the
construction contract are not included in the cost of the construction contract.
1.3. Accounting for revenue, expenses and determining business results of
construction activities
1.3.1. The view of approaching revenue, costs and determining business results of
construction activities by transaction
1.3.1.1. Contents of transactional approach
a/ Concept of construction contract
Construction contract (construction contract) is a written contract for the construction of an
asset or combination of assets that are closely related or interdependent in terms of design,
technology, function or other primary uses.
b/ Consolidation and modification of construction contracts
- When a construction contract involves many assets, the construction of each property
will be considered as a separate construction contract when simultaneously satisfying the
following 3 conditions:


7
+ Offers are determined separately for each asset and each asset can operate independently
+ Each property has gone through a separate negotiation process with each contractor and

the customer can accept or reject the part of the contract related to each property and
+ Can determine the cost and revenue of each asset
c/ Time of revenue and expense recognition and determination of construction business
results
For the transaction-based approach, the identification of revenue-generating transactions in
a construction enterprise is now determined based on whether the sale has been completed or
not, because in fact there are many cases where Multiple related transactions taking place at the
same time or as parts of a single transaction can also influence a decision on the nature of a sale.
Transaction-recognized expenses are recorded in proportion to the revenue generated from that
transaction.
Construction revenue is recognized when all five of the following conditions are satisfied.
For the determination of business results, the time to be recorded is usually according to
the accounting period such as the end of the quarter, the end of the year. After collecting all
revenue and construction costs incurred in the period, the accountant will transfer them to
determine business results. This is the basis for presenting revenue and expense information and
determining business results on financial statements, specifically business results, and notes in
financial statements.
1.3.1.2. Method of determining and recording revenue and expenses and determining
business results of construction activities
Under this approach, when the outcome of a Construction Contract can be considered to
be relatively certain, the revenue and expenses related to the Construction Contract should be
recognized as the revenue and Expenses of the Contract. proportionally to the amount of work
completed on the balance sheet date. The anticipated loss of a Construction Contract should
immediately be recognized as a regulatory expense.
Revenue and expenses are recognized according to the completed portion of the Contract
referred to as the percentage of completion method. Under this method, revenue is determined
to match the incurred costs of completed work shown in the income statement.
1.3.1.3. Accounting for revenue, expenses and determining business results of
construction activities
To account for revenue, expenses and determine business results of construction activities,

accountants will use Account 511, Account 621, Account 622, Account 623, Account 627,
Account 632, Account 911, Account 154. Each account will open a detailed book to track each
Contract depending on the specificity and details of each part of the work to be performed under
the contract.
Construction enterprises are popularly applying the method of contracting construction
works to their subsidiaries or affiliated enterprises or to production groups and teams. This is the
main method and suitable for the current trend. The securitization mechanism includes itemized
and compact securitization.
1.3.1.4. Presentation of information in financial statements
Enterprises need to report: the amount of Contract revenue recognized in the period, the
method to determine the Contract revenue, the methods to determine the part of work completed
during the Contract performance. Total expenses incurred and profit recognized to date, amount
of prepayments received and amount of outstanding retention.


8
1.3.2. The view of approaching revenue, costs and determining business results of
construction activities under contract
1.3.2.1. Contents of the contract approach
a/ Concept of contract
A contract with a customer is an agreement between two or more parties that creates
enforceable rights and obligations. The enforceability of rights and obligations in a contract is a
matter of law. Contracts can be made in writing, orally or implicitly according to the business
practices of the entity. The practices and procedures for establishing contracts with customers
may vary across jurisdictions, economic sectors, and Businesses. In addition, they may vary
within an Enterprise (for example, they may depend on the type of customer or the nature of the
goods or services committed). Businesses must consider these practices and processes when
determining whether and when a customer agreement creates enforceable rights and obligations.
When considering contracts with customers, the following criteria should be considered:
+ The Contracting Parties have accepted the Contract (in writing, orally or according to

other business practices) and committed to perform their respective obligations.
+ Be able to determine the rights of each party in relation to the goods or services to be
transferred;
+ Can specify payment terms for goods or services to be delivered;
The contract is of a commercial nature (is the risk, time or value of the entity's future cash
flows that are expected to change as a result of the Contract)
+ It is possible to receive payment due to the Enterprise's right to receive when delivering
goods or services to customers.
b/ Consolidation and modification of construction contracts
Where an enterprise enters into at the same time or near the same time two or more
contracts with the same customer (or related parties of the customer), the enterprise recognizes
such contracts as a single contract if one of the following criteria is guaranteed:
a- The contracts are negotiated as a package contract with the same commercial purpose.
b- The value of the payment to be paid in one contract depends on the price of the other
contract or the performance of the other contract.
c) The construction works committed in the contract (or a number of construction works
committed in each contract) is a single obligation to be performed in accordance with the
provisions of the contents of identification. contractual obligations.
c/ Time of revenue and expense recognition and determination of construction business
results
For each Contract at its inception, the Enterprise must determine which obligations under
the Contract will be fulfilled within a period or at a point in time in order to determine when
revenue, expenses and determine business results accordingly. To ensure the matching principle,
the time of recognition of expenses must be consistent with the time of recognition of revenue.
When revenue is recognised, an expense shall be recognized corresponding to the obligation
fulfilled under the Contract. On that basis, accountants will determine business results.
- The contract is completed over a period of time
- The contract is completed at a time
1.3.2.2. Method of determining and recording revenue and expenses and determining
business results of construction activities

Methods of measuring progress
The civil construction enterprise must apply a single method of measuring performance
for each performance obligation completed over a period of time, and the enterprise must apply


9
that method consistently to each performance obligation. with similar performance obligations
and under similar circumstances. At the end of each reporting period, the Enterprise is required
to re-measure its progress toward fulfilling a performance obligation that has been fulfilled over
a period of time.
The evaluation of the completed work under the Construction Contract is carried out
according to the planned schedule (Contract implementation schedule), when the construction
contract performance results can be estimated reliably, the Revenues and expenses related to the
construction contract are recognized in proportion to the completed work as determined by the
contractor on the date of making the financial statements, regardless of whether the invoice is
paid according to the planned schedule or not and how much is the amount recorded in the
Contract?
Recognition of revenue from construction activities under the Contract
Revenue from construction activities under the contract is recognized in 5 steps:
Firstly: Identify the Contract and the object of the Contract
Second: Determine the obligation to perform in the contract
Thirdly: Determine the value of the contract
- Determine transaction price
- Variable payout (not fixed)
- Refund obligation
- Estimates are limited in terms of variable payouts
- There is a substantial financial support element in the contract
- Non-monetary payments
- Payments payable to customers
Fourthly: Allocating transaction prices to performance obligations

- Allocation based on independent selling price
- Distribution of discounts
- Variable payout allocation
- Change transaction price
Fifthly: Revenue recognition
Recording construction costs under the Contract
In addition to the costs are collected similarly as in the case of transactional approach,
however, cost recognition should be made in accordance with the Contract obligations.
When the work completed is determined by calculating the costs incurred up to the present
date of the contract, the costs associated with the work completed are included in the contract
costs until that time.
An enterprise must recognize the costs incurred to obtain a contract with a customer as an
asset if it is expected to recover the costs. Costs incurred to obtain a contract are costs incurred
by the Company to obtain a contract with a customer that would not have been incurred if the
Company did not obtain such a contract (for example, sales commissions). Costs incurred to
complete the Contract are recognized as assets when those costs satisfy the following criteria:
- Expenses directly related to the Contract or the proposed Contract that the Enterprise can
specifically determine
- The costs of creating or augmenting the Enterprise's resources that will be used to fulfill
(or continue to fulfill) future performance obligations.
- Expenses expected to be recovered


10
1.3.2.3. Accounting for revenue, expenses and determining business results of
construction activities
The accounting for revenue, costs and determination of business results of construction
activities under the Contract is still carried out according to the contract mechanism similar to
the transaction-based approach, but the objects of collection are according to the contractual
obligations. .

In addition to using the same Accounts as for the transactional approach, civil construction
businesses may open additional accounts that reflect contractual assets and contractual liabilities
in addition to accounts receivables from customers and accounts payable to sellers.Recognition
of revenue is made according to the progress of contract completion.
Thus, with the method of accounting for revenue and expenses under the contract, revenue
and expenses are not only collected and allocated according to the work, but the value of the
contract is gathered and allocated to each obligation. in the contract. Determining the
independent selling price for each obligation helps to allocate revenue and expenses for each
obligation in a more reasonable manner. When the obligations are fulfilled, the accountant can
immediately determine the revenue and expenses and determine the business results, thereby
determining the business efficiency of each obligation under the Contract. Determining revenue
and expenses under the Contract is more accurately determined because the Enterprise can
predict in advance variable payments such as bonuses, penalties, non-monetary payments, or
financial support factors….
1.3.2.4. Presentation of information in financial statements
Information on the financial statements approached according to the contract is presented
as follows:
o Content presented on financial statements
o Notes on financial statements
o Contracts with customers`
o Separation of revenue information
o Separation of cost information
o Contract balance
o Obligation to perform
o Transaction price allocated to remaining performance obligations
o Important judgments when recognizing contractual revenue
o Determine the time to complete the performance obligation
o Determine the transaction price and amortization of the performance obligation
o Assets recognized from the cost of acquiring or completing a contract with a customer
1.4. Experience in applying international accounting standards, revenue from

contracts with customers IFRS15
1.4.1. International Accounting Standards
In the current trend of globalization, when accounting is no longer a national issue but also
a global one. There is a need for a common accounting standard system, which is considered a
common accounting language, in order to improve the objectivity and comparability of financial
information globally.
The objective of the financial statements is to present relevant financial information with
high reliability about the financial position and business results of the company so that investors
can make the right decisions.
On the one hand, the IASB maintains effective international accounting standards, and on
the other hand issues new standards on financial reporting. The applied international accounting


11
standards are also reviewed and revised accordingly. . During this time, an important milestone
was the agreement with the Financial Accounting Standards Board (USA). The two sides have
cooperated to review the differences between the International Accounting Standards and the
American Accounting Standards. The IASB and FASB have jointly signed a memorandum of
understanding committing to research and develop to issue a set of high-quality common
international accounting standards globally.
1.4.2. Advantages of international accounting standards IFRS 15
After a period of research and discussion, IASB and FASB have published financial
reporting standard IFRS 15- Revenue from contracts with customers. This Standard comes into
effect from January 1, 2018. Revenue is considered the most important factor in businesses as
well as investors. The application of this standard also greatly affects the preparation and
presentation of financial statements.
Advantages
Firstly, Determine the construction contract
Secondly, determine the obligations of the Contract
Thirdly, about the time of recording

Fourthly, recognize revenue and expenses under the contract
Fifthly, determine the contract value and allocate the contract value to the obligations
Disadvantages
- Although IFRS increases financial transparency for users of financial statements around
the world, some enterprises think that the IFRS accounting system is too complicated.
- In some countries the basis of accounting is still on the historical cost basis as in
Vietnam, while IFRS 15 is based on the fair value basis. In order to apply fair value, an efficient
market is required.
- The cost to make the conversion to IFRS is quite large, making many businesses not
want to convert. Moreover, the transformation depends on the political and cultural system of
each country. The choice of how to apply IFRS will vary from country to country.
- The level of management team and accounting personnel need to be trained to have high
professional qualifications to be able to perform;
1.4.3. Experiences of countries around the world when applying IFRS 15
1.4.3.1. Experience of Petrofac Group
1.4.3.2. Experience of Bouygues Group
1.4.3.3. Lessons learned for construction enterprises in Vietnam when applying IFRS 15
Conclusion Chapter 1
Chapter 2
ACCOUNTING STATUS OF REVENUE, COSTS AND DETERMINATION OF
BUSINESS RESULTS OF CONSTRUCTION ACTIVITIES IN CIVIL
CONSTRUCTION ENTERPRISES IN HANOI
2.1. Overview of construction activities in civil construction enterprises in Hanoi
2.1.1. Development history of the civil construction industry in Vietnam and Hanoi
2.1.2. Characteristics of management organization and production and business activities
2.1.2.1. Organizational and management characteristics
The actual survey of civil construction enterprises in Hanoi shows that the organizational
and management model in construction enterprises often follows the model of a company or a
corporation.



12
According to the company model: Through the survey, the enterprises implementing the
management organization according to this model are usually joint stock companies, private
companies, limited companies, partnerships. Civil construction enterprises in Vietnam in
general and in Hanoi in particular are basically small and medium sized enterprises, so the
corporate model accounts for a large proportion. These companies are organizations with
independent economic accounting status. The management model of these enterprises is usually
organized in two-tier, three-level or a combination. According to the survey 68% of the
companies surveyed are small and medium sized companies.
Corporation model: under this model, the head is the Chairman of the Board of Directors
and the CEO. The assistant to the Board of Directors and the General Director is the deputy
general director, and the departments include: Planning, organization, engineering, production
and construction, human resources, construction investment, cost estimation... Below are the
member units organized into affiliated accounting units without legal person status and
independent accounting units with legal person status. In addition, in the management system of
enterprises of this type, it is possible to organize an additional supervisory board that plays the
role of inspecting and monitoring the activities of the Board of Directors and the Board of
Directors so that the activities of the General Director The company is operated in a transparent
manner for the benefit of the Corporation's shareholders.
2.1.2.2. Features of production and business activities
In today's competitive environment, in order to have a contract or a large construction
project, most civil construction companies have to do construction bidding. For small and
medium-sized construction works, there is usually no need to bid, between the investor and
the contractor, there should be a contract to sign the execution of the work or construction
project. After the contract is signed or after successful bidding, enterprises will contract out
works and work items. The contract allocation depends on the capacity of the enterprise, the
scale of the project as well as the existing capital of the enterprises conducting the contract.
Basically, there are two main forms of contract assignment: compact contract and
management account (cost item).

2.1.2.3. Features of construction process and construction process of civil
construction works
2.1.3. Characteristics of financial management mechanism in civil construction
enterprises in Hanoi
2.1.4. Actual situation of applying organizational model of accounting apparatus
Survey results of 65 companies including civil construction companies and corporations.
The accounting model that is being used commonly in enterprises is the centralized and
distributed accounting apparatus organization model, which is suitable for medium and large
sized companies with a wide range of activities. stretching accounts for 68% (For example
Vinaconex 1 joint stock company, Hanoi civil construction joint stock company...).
For small and medium sized companies, the scope or area of operation is narrow (eg, Thu
Do Youth Construction Joint Stock Company, Phu Xuan Construction Company Limited, etc.)
often choose an organization. the centralized accounting apparatus accounts for 20%.
In addition, 12% of surveyed companies have a distributed accounting system. These are
corporations that have affiliated companies or have affiliated enterprises
2.1.5. Actual situation of applying accounting policies
Currently, 100% of companies have applied Circular 200/2014/TT-BTC dated December
22, 2014, Circular 133/2016/TT-BTC dated August 26, 2016 and VAS 15 standards. In which a


13
number of corporations and groups are preparing to convert to apply international accounting
standards IFRS 15. These are mainly large, foreign-invested companies.
2.2. Actual situation of revenue, cost accounting and determination of business
results of construction activities in civil construction enterprises in Hanoi
2.2.1. Actual situation of application of construction contracts in civil construction
enterprises in Hanoi
According to the nature and content of the construction contract, 30% of civil construction
enterprises are mainly large-scale enterprises such as Vinaconex Corporation, Handico
Construction Corporation.... all perform contracts from consulting, design, survey, construction,

supervision as well as installation of technological equipment. Usually these companies are a
main general contractor with financial capacity and large scale, often able to bid for large
projects. These companies can then hire subcontractors or assign subsidiaries to perform each
part of the project. 70% of civil construction enterprises are small and medium-sized enterprises,
often subcontractors or subsidiaries of corporations, due to their limited capacity in terms of
scale and construction capacity or financial capacity to accept only part, each work item. The
signed contracts can be design consultancy contracts, part construction contracts or equipment
supply contracts. In addition, the civil construction enterprises that perform contracts to provide
human resources, machines and construction equipment... These are small-scale enterprises,
often lack of work to do, so they are ready to accept it. perform this contract to ensure the
operation of the Enterprise.
In the form of contract price, construction contract
+ For package contracts: only about 5% of enterprises sign package contracts, these
contracts are usually small contracts with short implementation time such as repair or expansion
of works.
+ For fixed unit price contracts: this is the contract signed mainly between main
contractors and subcontractors or with affiliated companies, accounting for 78%.
+ The contract of adjusted unit price is less than 10% applied, mainly applied to works of
construction period, affected by time and environmental factors. However, the degree of
adjustment depends on the agreements in the contract.
In addition, the contract has a unit price over time, and the combined contract only
accounts for 7%
According to the relationship of the contracting parties, the construction contract currently
surveyed by the survey includes mainly main contractor contract, subcontractor contract,
internal contract contract. Contracts with foreign elements account for only about 10% because
domestic enterprises often have a better grasp of the regulations as well as the steps to
participate in bidding for works and work items.
According to the pricing method, at civil engineering enterprises, the main type of contract
is the fixed price contract, accounting for 90%, the contract with additional costs accounting for
only 10%.

During the execution of a Construction Contract, there are often fluctuations such as
design changes, an increase in construction volume or changes in prices... Therefore, the
modification of a Construction Contract is a problem. Problems that businesses often encounter.
However, at present, there is no regulation on how the contract amendment will be
implemented, leading to the Enterprise having no basis to determine whether to establish a new
contract or cancel the old one. to establish a new contract or to perform as part of an existing


14
contract. The modification of contracts at construction enterprises is often done according to the
subjective point of view of the contract signer, so there is no consensus on how to set up the
contract.
2.2.2. Time to recognize revenue, expenses and determine business results of
construction activities in civil construction enterprises in Hanoi
Through the survey at civil construction enterprises, 65 surveyed enterprises all recorded
revenue and expenses and determined the results to be approached by transaction. Therefore, the
time of revenue recognition is determined based on the revenue recognition conditions and not
on a contractual basis.
Each work part, work item has a revenue and cost estimate, accountants often have to stick
to the estimates to record revenue and expenses accordingly. Because the price of the works is
determined in advance right at the time of signing the contract, usually fixed-price contracts, the
recognition of revenue and expenses must not exceed the estimate. Any arising amounts
exceeding the estimate must be re-arranged with the investor or main contractor. Works usually
last from a few months to several years, so the recognition of revenue, expenses and
determination of business results is often divided into several stages.
In addition, for small and medium-sized companies, often these companies are not
qualified to contract a large project but are only subcontractors or subsidiaries in a corporation.
undertake a part of a work or a work item. The time to recognize revenue here is to recognize
revenue when all construction work is completed as agreed.
2.2.3. Method of determining and recording revenue, expenses and determining

business results of construction activities in civil construction enterprises in Hanoi
2.2.3.1. Method of determining revenue, cost and determining business results of
construction activities in civil construction enterprises in Hanoi
- Method of determining revenue from construction activities
Although each construction project and Enterprises sign one or several construction
contracts, the recognition of revenue and expenses does not depend on the contract or the time
to complete the signed contract but depends on transactions generate revenue. When the
conditions are met, the civil construction enterprise will recognize the revenue regardless of the
construction contract.
Through the survey, 100% of civil construction enterprises signed contracts according to
the completed work volume but did not sign contracts according to the completion schedule.
This means that revenue recognition is made according to the amount of work completed and
delivered. In which, the volume of completed and handed over work is determined by the
construction enterprises based on the percentage of completion of the work, specifically based
on the percentage of actual costs incurred over the total estimated cost.
However, the work has been completed through the survey of 100% of enterprises,
although presented in the financial statements, it is applied according to the percentage method
between the actual costs incurred over the total cost according to the estimate, but in fact, the
enterprises is applying the completed work evaluation method. This is because the
determination of revenue is usually based on invoices issued to customers and is suitable for
each payment period according to the contract.
- Method of determining construction operating costs
The survey results of 65 civil construction companies in Hanoi showed that 100% of the
companies still applied the transaction cost method and corresponded to the volume of work
completed and handed over.


15
Construction accounting usually records revenue corresponding to a technical stop or each
work item according to the work estimate. Therefore, the recognition of the cost of the cost of

each work, work item is made corresponding to the time of revenue recognition, based on the
completion percentage of the construction product corresponding to the volume of construction.
the amount of work completed and delivered, or in other words relative to the revenue
recognised. Such determination of the cost of goods is not appropriate because there will be a
difference between the actual cost recognized and the actual costs incurred.
2.2.3.2. Recording revenue, expenses and determining business results of construction
activities in civil construction enterprises in Hanoi
- Recognition of revenue from construction activities
When considering revenue recognition, the civil construction enterprise is based on the
signed construction contract and on the value-added invoice sent to the customer about the
completed work volume. Civil construction enterprises are obliged to complete and hand over
the parts of the work committed under the Contract. Enterprises determine the jobs to be
performed in a Contract on the basis of detailed estimates for each work, work item. Each
accounting work will open a detailed book to track each payment corresponding to the revenue
recognized for each project or work item.
Civil construction enterprises incur payments such as bonuses and penalties for contracts
related to the progress of work completion, construction quality or construction safety, etc. The
bonuses are usually due to the enterprise's completion first. duration of contract. Bonuses are
usually recognized by Enterprises in other income when incurred and invoiced.
Construction Contracts do not generate payables to customers, substantial financial
supports. The current arising amounts are only accounted for at the time when the customer
takes over the work, if awarded, the Enterprises will record it in other income, if the contract is
penalized, the Enterprises will record a decrease in revenue. is recognized.
- Recording construction activity expenses
Currently, civil construction companies in Hanoi all account for costs, according to each
project and work item. Each work, work item is opened according to a contract code. Each
project, work item from the start to the completion is opened its own detailed tracking book.
Besides bonuses, civil construction businesses often face fines. The majority of surveyed
enterprises often incur these fines, accounting for 80% of surveyed enterprises. The fine under
the contract is because the construction enterprise often has to go to work due to unsatisfactory

quality, failure to ensure the construction progress according to the contract, failure to comply
with the design, etc. The fine is accounted for. record a decrease in revenue when incurred.
Besides, the author finds that in addition to the costs directly related to the contract
incurred after signing the contract, there are costs incurred before signing the contract such as
reception costs, contract negotiation costs, etc. contract, contract bidding costs. These costs are
obligatory costs that Enterprises must pay regardless of whether the contract is successful or not.
However, enterprises still recognize these costs in contract costs when the contract is signed and
performed. In addition, there are costs incurred directly related to the contract that are not
recognized in the contract.
2.2.4. Revenue and cost accounting and determination of construction business results
in civil construction enterprises in Hanoi
2.2.4.1. About the voucher system, user accounts
Through the survey, the system of vouchers and accounts at the construction enterprises
are in accordance with the guidance of Circular 200/2014/TT-BTC and Circular 133/2016/TTBTC


16
Through interviews with a number of accountants in the enterprise, it was found that the
accounting voucher system to reflect revenue and expenses is quite diverse and rich, because the
economic transactions arising in the enterprise are quite different and often.
2.2.4.2. About the order of accounting for revenue, expenses and determining business
results
- For small and medium-sized civil construction enterprises
- For enterprises applying the contracting mechanism
Activities of civil construction enterprises in Hanoi are mainly carried out through
contracting contracts. These contracts can be between superiors (corporations or companies)
and subordinates (subsidiaries or production teams). In addition, in case, the company cannot
perform all the work items, the company can sign a contract with a subcontractor. The two main
forms of payment in civil construction enterprises are itemized contract and compact contract.
Through the survey of civil construction enterprises in Hanoi, only about 20% of the surveyed

enterprises have contracted cost items, the rest 80% of the enterprises implement the compact
contract. However, the compactness of the contract depends on the size and structure of the
Enterprise.
+ For the case of itemizing: The contract for this item is usually done within the
corporation or company. Revenue and expense accounting and determination of business results
are all done at the superior unit. Lower-level units are often units that do not have the capacity to
manage and organize their own accounting such as groups, production teams or affiliated
enterprises.
+ For the case of compact contract: Most civil construction enterprises contract the works
to subordinates or subcontractors (contractors). Usually, the contracted party is a unit that has its
own accounting organization, capable of organizing construction as well as managing the work.
However, the transfer of costs and determination of business results depends on the
accounting decentralization and financial mechanism on profit distribution of each civil
construction enterprise.
Case 1: The lower level is only allowed to account for the cost according to the flat price
and settle it with the superior through Account 136, Account 336.
Case 2: Subordinates are accounted for the cost of Works, Work items at actual cost,
recognized as revenue at the flat price and business results before corporate income tax are
determined. At that time, the contracted subordinates can fully use accounts 632, 511,911 and
account them as an independent enterprise.
In addition, due to the accounting of construction activities under contract, revenue,
expenses and business results at civil construction enterprises in Hanoi are recognized under the
contract corresponding to the technical stop or according to the contract period. each work item
according to the volume of work completed and handed over. Therefore, the recognition of
revenue and expenses and determination of business results under the construction contract for
each work, work item is performed corresponding to the time of revenue recognition, based on
the ratio completion percentage of the construction product. Businesses recognize revenue
based on invoices that they issue to customers. To record revenue, civil construction enterprises
in Hanoi only use account 511 and not account 337.
2.2.5. Presenting revenue and expense information and determining business results of

construction activities on financial statements
Currently, at civil construction enterprises in Hanoi, arising economic transactions related
to revenue, expenses and determination of business results are usually reflected in receivables


17
from customers and payables. For the seller. Because enterprises apply the original price
principle, no estimates related to revenue and expenses are generated. Although revenue and
expenses for each contract are still recorded separately, enterprises can determine business
results for each contract.
- About Notes on Financial Statements: The notes on the financial statements of revenue
and expenses are fully explained by civil construction enterprises with information about each
construction contract. However, Enterprises do not make material judgments and changes in
those judgments relating to the Contract
- Separation of revenue information: The presentation of revenue recognized to customers
is currently explained by enterprises quite separately between contract revenue and other
revenue sources. In civil construction enterprises, in addition to construction contract revenue,
there is also revenue for other activities such as real estate business, mining, production and
processing of building materials, import and export business... ..
- Separation of cost information: Cost information is also presented by civil construction
enterprises separately the costs for each different type of business activity. For construction
contracts, the information is presented for each work project or work item. For ongoing works,
the accountants present information about the beginning and ending numbers for each project.
- Contract balance: The balances including the opening and closing balances of receivables
from customers and payables to sellers are presented in quite specific detail for each project in
progress. and for each customer. In which, the completed works and the unfinished projects are
shown on the financial statements
2.3. Assessing the current status of revenue and expense accounting and determining
the business results of construction activities in civil construction enterprises in Hanoi
2.3.1. Achievements

2.3.2. The limitations still exist
Firstly: Determine the construction contract
Construction contracts in civil construction enterprises have many different types.
However, most Construction Contracts are not divided into obligations to be fulfilled under the
Contract. Which Contracts are obligated to complete at a time, which Contracts are obligated to
complete over time. The current determination of the Contract does not guarantee the basis for
the recognition of revenue and expenses according to the actual arising but mainly only to
ensure the recognition in accordance with the Contract.
Secondly: Time to recognize revenue and expenses and determine construction
performance results
As mentioned above, the current revenue access at civil construction enterprises is still
based on transactions without being attached to each construction contract. Although guided by
VAS 15 and TT 200, it has not yet covered all arising cases related to a Contract. Revenue
recognition is still based on arising transactions related to revenue, expenses and determination
of business results. The current approach to revenue, expenses and determination of business
results is mainly for tax purposes but not for accounting work.
Third: Method of determining and recording revenue and expenses and determining
construction results
- Method of determining revenue
In the present Contract, Enterprises do not refer to the transfer of obligations under the
Contract to be performed over a period of time or performed at a point in time. Failure to


18
determine the time of transfer leads to the recognition of revenue and expenses under the
Contract which will not be timely and not true to the nature of the arising economic transactions.
Through the survey, civil construction enterprises still apply revenue recognition
according to the volume of work completed and handed over. Revenue is recognized only when
the customer confirms the completed workload and accepts payment. This recognition is quite
appropriate in the current case when Enterprises still apply contracts according to the amount of

work completed and handed over. However, this method of recognition does not reflect the
actual progress of the work that the enterprise is implementing.
- Method of determining cost
The method of determining the cost according to the percentage of completion of the work
is suitable with the volume of work completed and handed over according to the estimate. The
determination of costs is done in proportion to the determination of revenue. Such cost
determination will usually not be associated with the actual costs incurred, inconsistent with the
contract performance schedule.
- Regarding revenue recognition from construction activities
+ Regarding the performance obligations under the construction contract
When performing the Contract, enterprises do not identify this Contract as a separate
obligation or a series of separate obligations. The determination of these obligations should be
based on whether the transfer of control of the assets to the customer is at a point in time or over
time. In which cases, the Contract will have only one obligation transferred to the customer, in
which cases the Contract will include a series of obligations transferred to the customer.
+ Regarding the determination of transaction value according to the construction contract
Civil construction enterprises do not have detailed instructions in case the contract has a
clause on the value of the transaction that can be changed (discount, trade discount, discount,
returned goods), causing difficulties. difficult for businesses to recognize revenue. Currently,
businesses often recognize revenue at the invoice price when the product has transferred most of
the risks and benefits to the customer, when there is evidence of rebate, trade discount or
discount. just recorded a decrease in revenue.
+ On the allocation of contract value to the obligations of the construction contract
Since most civil construction enterprises only define each Contract as an obligation to
perform, the entire Contract value is not segregated for individual obligations. This leads to the
Enterprise not being able to determine the revenue and expenses for each obligation to perform
in the Contract, so it will be difficult to analyze the performance of each arising obligation. in
the contract.
- Regarding the recognition of construction costs
The costs incurred under the Contract include the costs directly related to each Contract

including the costs of direct materials, direct labor costs, manufacturing overheads. However,
there are expenses incurred prior to the formation of the Contract but these costs are not related
to the Contract or cannot be recovered under the Contract and are still recognized by the
Enterprise in the Contract costs. In addition, there are expenses that the Enterprise can recover
according to the progress of the Contract, but the Enterprise will record them all in expenses in
the period.
Fourthly: Accounting for revenue, costs and determining construction performance
results
+ As mentioned above, economic transactions arising in connection with the collection of
revenue, expenses and determination of business results are normally recorded in accounts


19
receivable from customers and payable to customers. sell. Although there is a separation
between revenue, contract costs and revenue from other activities, it does not recognize
contractual assets and contractual liabilities separately. This means that all contractual
receivables and payables are treated as non-binding contractual obligations.
+ About accounting under the contract system
 The regulation of accounting accounts used in the contracting department and the
contracting division has not provided detailed, specific and unreasonable instructions, the
content reflected is not clear, the nature of the contract has not been shown. construction
activities.
 The current accounting system also creates flexible conditions for enterprises, so the use
of the bookkeeping system and especially the business book to keep track of the receiver is not
separate accounting and there is no mechanism for inspection and control. control easily leads to
many negatives in administrative management.
 The contracted department when completing the Works, Work items often do not want
to save on material costs and labor costs because if there are savings, they will not enjoy those
costs. Therefore, contracted departments often do not want to save costs or have savings, they
find ways to raise the price of purchased materials, declare an increase in the amount of

materials used for their own benefits, even using Invoices, contracts with outsourced workers
over which the company has no control.
 Currently, enterprises applying the contracting mechanism have not paid attention to the
internal norm system in the process of contracting. Construction enterprises still rely on the
norm system that the Ministry of Construction has promulgated mandatory details for the field
of Basic Construction (norms on quantity and norms on unit prices). However, when assigning
contracts to subordinates, although they must comply with the quantity and quality norms,
because there is no internal norm, the assignment of contracts to subordinates according to the
State norm system or contracted according to the State's norms. percentage of revenue payable
to superiors. For expenses greater than the contracted amount that are not settled and the
amounts not paid are recorded as internal receivables, and because there is no basis for assigning
responsibility to the contracted party, this debt is usually cannot be recovered.
Fifthly: Presenting information on financial statements
Through the survey, civil construction enterprises did not present the following
information because it is considered as separate information of each Contract, which is not
necessary to be presented in the financial statements such as:
- Obligations to perform on the Contract with the customer
- The transaction price is allocated to the remaining performance obligations
- Important judgments when recognizing contractual revenue
- Determine the time to complete the performance obligation
- Determination of transaction prices and values to be allocated to performance obligations
- Assets recognized from the costs of acquiring or completing a contract with a customer
2.3.3. Causes of limitations
2.4. Assessment of the current situation of applying international accounting standards
IFRS 15 in civil construction enterprises in Hanoi
Currently, Vietnam is in the preparation stage and is gradually putting international
accounting standards into practice in Vietnam, including IFRS 15-Revenue from contracts with


20

customers. The author has built a questionnaire consisting of 40 closed and open questions, sent
to 30 subjects including accountants and financial managers of the company, auditors, lecturers
teaching accounting subjects, audit to assess the understanding as well as the ability to apply
IFRS 15 to enterprises in Hanoi.
The questionnaire includes:
+ Part 1: General information
+ Part 2: Survey information about IFRS 15- Revenue from contracts with customers
+ Part 3: Difficulties in applying IFRS 15
Conclusion of chapter 2
Chapter 3
COMPLETE ACCOUNTING OF REVENUE, COSTS, DETERMINATION OF
BUSINESS RESULTS OF CONSTRUCTION ACTIVITIES IN CIVIL
CONSTRUCTION UNITS IN HANOI
3.1. Orientation to perfect accounting of revenue, expenses and determination of
business results of construction activities in civil construction enterprises in Hanoi
3.1.1. Development orientation of construction enterprises in general and civil
construction enterprises in Hanoi in particular
3.1.2. Basic requirements of perfecting revenue and expense accounting and
determining business results of construction activities in civil construction enterprises in
Hanoi
3.1.3. Orientation to perfect accounting of revenue, expenses and determination of
business results of construction activities in civil construction enterprises in Hanoi
3.2. Complete solution to accounting for revenue, expenses and determining business
results of construction activities in civil construction enterprises in Hanoi
3.2.1. Finalize the definition of the construction contract
Construction contract is one of the important factors in the civil construction business.
This is the starting point for all construction activities of the enterprise, the basis for accounting
to record revenue and expenses and determine business results in the enterprise. Because the
construction needs of each customer are different, the construction contract is also determined
flexibly to suit each customer. Depending on the different purposes of use, construction

contracts are divided into different types. However, in order for the Contract to serve as a basis
for revenue and expense recognition and business results determination, construction contracts
need to be classified into two groups according to contract obligations
3.2.2. Finalize the time to recognize revenue, expenses and determine business results
Construction contract
When approaching the contract, the civil construction enterprise should determine this
contract the right to control the construction work performed over a period of time or performed
at a point in time regardless of whether it is a normal construction contract. or real estate sales
contract. If the control over the construction works is exercised within a period of time as
committed in the contract, upon receipt of payment from the customer according to the contract
schedule, this amount will be recognized in revenue.


21
3.2.3. Perfecting the method of determining and recognizing revenue and expenses and
determining business results Construction contracts
3.2.3.1. Completing the method of determining revenue and expenses according to
construction contracts
- Perfecting the method of determining revenue according to the construction contract
To determine the method of determining contract revenue, accountants need to determine
which obligations are fulfilled at one point in time and which are discharged over time. In the
case of obligations completed by time, it is necessary to determine revenue recognition
according to the contract completion schedule without the customer's confirmation. The
Contract Completion Percentage should be applied as a ratio of the actual costs incurred for the
work completed to the total estimated cost of the Contract.
- Completing the method of determining costs under the Contract
Contractual costs should be aggregated for each contractual obligation. The determination
of costs must also be consistent with the method of determining revenue. It is a method of
determining contract completion schedule. When qualifying for revenue recognition,
accountants will record expenses corresponding to each completed obligation. Cost of

Completion Percentage Selectable input or output scaling methods. However, according to the
author, a percentage should be used between the actual total costs incurred over the total
estimated costs for that obligation.
3.2.3.2. Completing revenue and expense recognition under construction contract
- Identify the steps to recognize revenue
Currently, the recognition of revenue and expenses in civil construction enterprises is still
mainly approached by transaction. However, due to the unique characteristics of the civil
construction unit, the determination of revenue, costs and determination of business results is
done before the construction activities are carried out and is done according to the agreement. in
the contract. This makes the transaction-based approach to revenue no longer relevant. The
recognition of Contract revenue will be the basis for recognizing expenses under the Contract.
Although there is a VAS 15 standard that stipulates contractual revenue, it has not yet provided
a way to determine how contract revenue is, on that basis to determine contract costs. Therefore,
it is necessary to provide specific steps on how to approach contractual revenue.
- Finalize the valuation of the contract
Where construction contracts include both fixed payments and variable payments. The
company needs to determine whether the variable payment is due to discounts, rebates,
rebates, subsidy credits, price incentives, performance bonuses, etc. The company needs to
estimate the value of the variable payments by using one of two methods: expected value and
most probable value.
- Completing transaction price allocation for contractual performance obligations
If the contract has only a single performance obligation, the entire transaction price is
allocated to that transaction. However, if the contract has multiple obligations, the transaction
price will be allocated to the related obligation based on the estimated price of each obligation to
perform under the contract. As in the case of a construction enterprise, both perform the
obligation to execute the work and perform the obligation to supply and install equipment. The
price of the Contract will have to be allocated specifically for each obligation of construction
work and obligation to provide equipment.



22
3.2.3.3. Completing cost recognition under the contract
To determine contract revenue, one of the important aspects of accounting is determining
contract costs. The costs directly related to each contract such as cost of goods sold, labor costs,
direct material costs, construction machine costs, other general management costs... These costs
are accounted for. directly gathered under each contract. In addition, the machinery and
equipment not actually used for the Contract is still included in the Contract cost, which is
unreasonable, it should be excluded from the Contract cost.
3.2.4. Completing revenue and cost accounting and determining business results
Construction contracts
- Completing the accounting system for civil construction enterprises under the Contract
In addition to using the revenue and expense accounts and determine the business results.
To account for contractual revenue and expenses, it is necessary to use additional accounts
reflecting contractual assets and contractual liabilities in addition to accounts receivable from
customers and payable to sellers. normally. Accounts receivable from customers and payable to
suppliers are recognized only when no binding conditions are attached to the Contract. If the
recognition of revenue and cost of capital is attached to binding conditions in the Contract, the
Enterprise should use according to the account the assets under the Contract and the liabilities
under the Contract.
Supplements and adjustments are needed to guide civil construction enterprises to obtain a
legal framework for revenue and cost accounting and determine business results Construction
contracts in pre-contract terms. The system of accounting accounts used, the recording content
of each party, including the assignor and the contracted party, need to be revised. Building an
account system to provide information to serve the requirements of the contracting mechanism
of civil construction enterprises.
Civil construction enterprises are applying the contracting mechanism but have not paid
due attention to the construction of the internal norm system in the process of contracting works.
Construction enterprises completely depend on the detailed and specific norm system of the
Ministry of Construction (norms in both quantity and unit price) but have not yet built their own
system of norms to serve the construction industry. internal contract.

- Completing the order of revenue and expense accounting according to the construction
contract
This accounting procedure applies to Construction Contracts, the completion of Contracts
over time
 At the time of receiving the advance from the Contract
Debits to Cash Account
Have Accounts Payable under Contract
 In the first stage, when the obligation has been fulfilled but not yet reached the technical
stop, payment is accepted by the customer, the revenue recognition is equal to the actual costs
incurred.
+ Debits to Assets Account under Contract
Debit Account Payable under Contract
Have a Sales Revenue Account
+ Account debit Cost of goods sold
Have account in progress of production and business expenses


23
 When the contract completion result reaches the technical stop accepted by the
customer,
+ Debits to Assets Account under Contract
Have a Sales Revenue Account
+ Accounts Receivable from customers
Have an Asset Account under the Contract
+ Account debit Cost of goods sold
Have account in progress of production and business expenses
 In the final stage when the fulfillment of the Contract obligations is equal to or lower
than the technical stoppage level paid by the customer
+ Accounts Receivable from customers
Have a Sales Revenue Account

+ Account debit Cost of goods sold
Have account in progress of production and business expenses
- Perfecting the contracting mechanism, building norms in construction in progress
enterprises
Currently, construction in progress enterprises are applying the contracting mechanism.
Construction enterprises completely depend on the detailed and specific norm system of the
Ministry of Construction (norms in both quantity and unit price) but have not yet built up a
norm system for the construction work. internal contract. For expenses larger than the amount of
the contract that have not been settled and the unpaid amounts are recorded in internal
receivables, Enterprises are often confused in assigning responsibility to the contracted team,
debts over many years. which cannot be recovered must be recorded as bad debts.
3.2.5. Completing the presentation of information on the financial statements
The enterprise must present in the financial statements amounts recognized as assets
arising under the contract and liabilities arising from the contract. Assets arising under the
Contract must be recognized separately from receivables (these amounts are not bound by
contract conditions). If the customer makes a payment, or the Company has an unconditional
claim to the value of the payment before the Company delivers the goods or services to the
customer, the Enterprise must represent the contract as is a liability arising from a contract,
when payment is made or when payment is due (whichever occurs first). A liability arising from
a contract is an obligation of the enterprise to deliver goods or services to a customer when
payment has been received from the customer (or the value of the payment is due). If
Enterprises perform a contract by delivering goods or services to a customer before the
customer makes payment or before payment is due, Enterprise must present the contract as an
asset to the customer. arising from contracts, excluding amounts presented as receivables. The
asset arising from the contract is the Enterprise's right to payment for goods or services that the
Enterprise has delivered to the customer.
3.3. Conditions for implementing solutions to improve revenue and expense
accounting and determine business results of construction activities in civil construction
enterprises in Hanoi
3.3.1. For the State and management agencies

3.3.2. For civil construction businesses
Conclusion of chapter 3