Abu Dhabi-based developer Aldar Properties has announced changes to its accounting policies that will allow it to record revenues from off-plan sales at an earlier stage.
The changes will apply to the company’s 2015 financial statements, it said.
In a statement issued on Tuesday, the company said it had taken the decision to adopt ‘IFRS 15’ following a detailed review of the new accounting standard.
It explained that the profile of revenue and profit recognition for Aldar would change following the introduction of IFRS 15.
The most important change relates to the timing of revenue recognition from off-plan developments.
Currently, revenues from off-plan developments are recognised at a point in time on delivery a completed unit – that is, when the property has been handed over to the buyer. However, under IFRS 15, “Aldar may also recognise revenues over time up to the point of completion based on the terms of our contracts,” the statement said.
This means Aldar can stagger the revenue recognition from the sale of an off-plan unit over a longer period of time, for example, when it first starts receiving payments from the buyer for completed work on separate phases of development, according to what is stipulated in the sales contract.
A spokesman for Aldar Properties told The National that being able to book off-plan sales of properties during the course of their completion would “better reflect the financial performance of the group to the underlying activities”.
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