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Construction contracts

Introduction to construction contracts

1.1 Introduction to construction contracts

A construction contract is a specifically negotiated contract for the
construction of a substantial asset.

e.g. stadiums, buildings, bridges, tunnels, ships.

Construction company Customer pays for the
agrees to build an asset on work done as the
behalf of a customer. construction progresses
and owns the asset on
completion.

IAS 11 looks at the accounting for construction contracts from the construction
company’s (seller’s) perspective.

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