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.

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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.

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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.

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Disclosure Under Construction Contracts MFRS 111

39 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.

40 An entity shall disclose each of the following for contracts in progress at the end of the

reporting period:

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(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.

41 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.

42 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.

43 The gross amount due from customers for contract work is the net amount of:

(a) costs incurred plus recognised profits; less

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(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.

44 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).

45 An entity discloses any contingent liabilities and contingent assets in accordance with

MFRS 137 Provisions, Contingent Liabilities and Contingent Assets. Contingent

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liabilities and contingent assets may arise from such items as warranty costs, claims,

penalties or possible losses.

Conclusion

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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.

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References

www.masb.org.my

www.ijm.com

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Attachment

MFRS 111

Annual report 2013 IJM Corporation Berhad

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