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Acknowledgement

We as a team member have taken efforts in this project. However, it would not have been
possible without the kind support and help of many individuals and organizations. We would like to
extend my sincere thanks to all of them. We are highly indebted to Madam Dalilah Binti Abdul Aziz
for her guidance and constant supervision as well as for providing necessary information regarding
the project & also for her support in completing the project. We would like to express our gratitude
towards our parents for their kind cooperation and encouragement which help us in completion of
this project. Our thanks and appreciations also go to our colleague in developing the project and
people who have willingly helped us out with their abilities.

Corporate Profile

IJM is one of Malaysia's leading conglomerates and is listed on the Main Market of Bursa
Malaysia Securities Berhad ("Bursa Securities"). Its core business activities encompass
construction, property development, manufacturing and quarrying, infrastructure concessions and
plantations. Headquartered in Selangor, Malaysia, IJM's regional aspirations have seen it establish a
growing presence in neighbouring developing markets with operations presently spanning 10
countries, with primary focus in Malaysia, India, United Arab Emirates, China and Indonesia. IJM's
phenomenal growth over the past three decades has been the result of its unwavering focus on its
core competencies, diversification into strategically related businesses and selective expansion into
new markets.

Brief introduction of the chosen MFRS

A construction contract is a contract specifically negotiated for the construction of an asset


or a combination of assets that are closely interrelated or interdependent in terms of their design,
technology and functions or their ultimate purpose or use. When the outcome of a construction
contract can be estimated reliably, contract revenue and contract costs are recognised as revenue
and expenses respectively by reference to the stage of completion of the contract activity at the
balance sheet date. The stage of completion of a construction contract is determined based on the
proportion that the contract costs incurred for work performed to-date bear to the estimated
total costs for the contract. Costs incurred during the financial year in connection with future
activity on a contract are excluded from costs incurred to-date when determining the stage of
completion of a contract. Such costs are shown as amounts due from/(to) customers on construction
contracts within trade and other receivables on the balance sheet unless it is not probable that such
contract costs are recoverable from the customers, in which case such costs are recognised as an
expense immediately. When the outcome of a construction contract cannot be estimated reliably,
contract revenue is recognised to the extent of contract costs incurred that are likely to be
recoverable. When it is probable that total contract costs will exceed total contract revenue, the
expected loss is recognised as an expense immediately. Contract revenue comprises the initial
amount of revenue agreed in the contract and variations in the contract work and claims that
can be measured reliably. A variation or a claim is only included in contract revenue when it is
probable that the customer will approve the variation or negotiations have reached an
advanced stage such that it is probable that the customer will accept the claim.

Where the amounts of construction contract costs incurred plus recognised profits (less
recognised losses) exceed progress billings, the net balance is shown as amounts due from
customers on construction contracts under trade and other receivables. Where the progress billings
exceed the sum of construction contract costs incurred and recognised profits (less recognised
losses), the net balance is shown as amounts due to customers on construction contracts under trade
and other payables.

Disclosure Under Construction Contracts MFRS 111

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An entity shall disclose:


(a) the amount of contract revenue recognised as revenue in the period;

(b) the methods used to determine the contract revenue recognised in the period; and

(c) the methods used to determine the stage of completion of contracts in progress.

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An entity shall disclose each of the following for contracts in progress at the end of the
reporting period:
(a) the aggregate amount of costs incurred and recognised profits (less recognised losses) to
date;

(b) the amount of advances received; and

(c) the amount of retentions.

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Retentions are amounts of progress billings that are not paid until the satisfaction of
conditions specified in the contract for the payment of such amounts or until defects
have been rectified. Progress billings are amounts billed for work performed on a
contract whether or

not they have been paid by the customer. Advances are amounts

received by the contractor before the related work is performed.


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An entity shall present:


(a) the gross amount due from customers for contract work as an asset; and
(b) the gross amount due to customers for contract work as a liability.

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The gross amount due from customers for contract work is the net amount of:
(a) costs incurred plus recognised profits; less
(b) the sum of recognised losses and progress billings

for all contracts in progress for which costs incurred plus recognised profits (less recognised
losses) exceeds progress billings.
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The gross amount due to customers for contract work is the net amount of:
(a) costs incurred plus recognised profits; less
(b) the sum of recognised losses and progress billings

for all contracts in progress for which progress billings exceed costs incurred plus
recognised profits (less recognised losses).

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An entity discloses any contingent liabilities and contingent assets in accordance with
MFRS 137

Provisions, Contingent Liabilities and Contingent Assets. Contingent

liabilities and contingent assets may arise from such items as warranty costs, claims,
penalties or possible losses.

Conclusion

As conclusion, IJM Corporation Berhad completely show all the disclosure under
Construction Contracts MFRS 111. The company accounting treatment is prescribe within revenue
and costs associated with construction costs. Revenue and costs are to be recognised by the
contractor in proportion to the stage of completion of contract activity if the outcome of a
construction contract can be estimated reliably. If the outcome cannot be estimated reliably, no
profit should be recognised. Instead, contract revenue should be recognised only to the extent that
contracts costs incurred are expected to be recoverable and contract costs should be expensed as
incurred. The stage of completion of a contract can be determined in a variety of ways, including
the proportion that contract costs incurred for works performed to date bear to the estimated total
contract costs, surveys of work performed, or completion of a physical proportion of the contract
work.

References

www.masb.org.my
www.ijm.com

Attachment

MFRS 111
Annual report 2013 IJM Corporation Berhad

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