Determination of Profit in Construction Contracts Based on Recognition of Revenues and Costs According to PSAK No.34 (Revised 2015).

(Case Study on Alpe Corporation CV)

Authors

  • Muhani Muhani Sekolah Tinggi Ilmu Ekonomi Kesatuan
  • Aming Tirta Sekolah Tinggi Ilmu Ekonomi Kesatuan

Keywords:

construction contract; determining profit; revenueand cost recognition; PSAK- 34

Abstract

Abstract. Company engaged in construction services may have a project either to be
completed in one period (short term) or more (long term). Recognizing revenues and
expenses for the project completed in one period is relatively simple, whereas for long term
project spesific methods are applied. The recognition of revenue is made on the basis of
expenses incurred, such as cost of raw materials, labor, etc at the time the percentage of
completion is computed. The purpose of this study is to analyse whether the accounting
practice applied by CV. Alpe Corporation in recognizing revenue and expense on
construction contractsis inconformity with Indonesian Statement of Financial Accounting
Standard: PSAK-34. The methodology used in this study is descriptive qualitative method
which test the accounting practice applied by the company, and compare it to the latest
Financial Accounting Standards. The result of this study reveals that both projects done by
CV Alpe Corporation in 2016 and 2015 are completed less than one year period (short
term). The accounting practice applied by the company is not fully in conformity with
PSAK-34. The company estimated percentage of completion based on cost to cost method
in accordance with expenditures spent every term weekly. Weekly expenses are debited
to Construction in Process account, whereas the estimated revenues are credited to
Unearned Revenue. No Progress Billing account was maintained. Expenses and revenues
are only recognized when the projects are fully completed.

Keywords: construction contract; determining profit; revenueand cost recognition; PSAK-
34

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Published

2021-06-26