{"id":3814,"date":"2024-11-02T09:57:46","date_gmt":"2024-11-02T15:57:46","guid":{"rendered":"https:\/\/q1dapyf5zv.onrocket.site\/?p=3814"},"modified":"2024-11-02T09:57:49","modified_gmt":"2024-11-02T15:57:49","slug":"aplicacion-de-la-nif-d-1-en-proyectos-de-largo-plazo","status":"publish","type":"post","link":"https:\/\/taxid.mx\/english\/aplicacion-de-la-nif-d-1-en-proyectos-de-largo-plazo\/","title":{"rendered":"Application of NIF D-1 in Long-Term Projects"},"content":{"rendered":"

The NIF D-1<\/a>, focused on the recognition of revenue from contracts with customers, is crucial for companies that manage long-term projects, such as construction. This standard allows revenue to be recognized as the delivery of goods or services progresses, more faithfully reflecting the value generated for customers at each stage of the project.<\/p>\n\n\n\n

\u00a0In this article, we will explore a practical case of Constructora ABC SA de CV, a company that applies the NIF D-1 <\/a>to record revenues progressively over a two-year construction project. Through this application, we will see how revenues and costs are allocated based on progress, allowing the financial statements to reflect the operational reality of the project.<\/p>\n\n\n\n

Context of practical case<\/p>\n\n\n\n


The company ABC Construction Company S.A. de C.V.<\/strong> sign a contract with the client Northern Real Estate<\/strong> Anonymous Society of Variable Capital <\/strong>to build an office building over a two-year period. The contract has a total value of $10,000,000 MXN<\/strong>, and the terms state that revenue will be recognized as the project is completed. The work includes the structure, electrical systems and finishes.<\/p>\n\n\n\n

Application of NIF D-1<\/h3>\n\n\n\n
    \n
  1. Identification of Obligations to Comply<\/strong>
    ABC Construction Company identifies that the contract includes multiple obligations to be fulfilled, which are integrated into a single construction obligation, since the client receives a global benefit from the entire work.<\/li>\n\n\n\n
  2. Determining the Transaction Price<\/strong>
    The transaction price is $10,000,000 MXN, which represents the amount that Constructora ABC expects to receive upon completion of the project. No variable consideration is expected, so the price is fixed.<\/li>\n\n\n\n
  3. Progress Measurement Method<\/strong>
    Since the building will be built over two years and the progress of the project can be measured directly, Constructora ABC decides to use the incurred cost method<\/strong> to measure progress. This method consists of calculating progress based on the costs incurred in relation to the total estimated cost.<\/li>\n\n\n\n
  4. Cost Estimation and Revenue Recognition<\/strong>
    ABC Construction estimates that the project will have a total cost of MXN $8,000,000. It is planned to incur 40% of the costs during the first year and 60% in the second.<\/li>\n<\/ol>\n\n\n\n

    Progress-Based Revenue Recognition Exercise<\/h3>\n\n\n\n

    Year 1<\/h4>\n\n\n\n