Long-term contracts: definition and accounting


The long-term contracts represent a particular type of contract. For best accountancy training Best school of accountancy In Lahore. As such, they benefit from a special accounting treatment. Generally characterized by the deployment of a single project over a long period and with a certain complexity, long-term contracts can be managed according to two methods. Compta-Facile presents a fact sheet devoted exclusively to the definition of a long-term contract and its management in accounting.
Long-term contract
The General Accounting Plan ( PCG ) provides a long-term contract definition . This is a contract that:
Generally lasts quite long (it extends over at least 2 years accounting)
It concerns a single project of construction, realization or participation as a subcontractor to the realization of a property or a service that is often complex, that is to say a good or a service (or a set of Goods or services),
And whose design, technology, function or end-use relate to the same project .
According to this definition, contracts relating to the construction of real estate or sales in the future completion state (VEFA) is considered, in particular, as long-term contracts. Concessions, on the other hand, are excluded, for example, from long-term contracts.
In general, long-term contracts relate to construction companies (BTP), public works companies, engineering companies and shipbuilding, aeronautics and space companies. These are fixed-price contracts in which an undertaking provides a service or delivers a fixed fixed remuneration as soon as the contract is concluded (possibly accompanied by a price revision clause).

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