Estimation Uncertainty in Revenue Recognition under the Percentage-of-Completion Method
First written in FY2021. 2 of 3 entries say "Restated". Latest entry: FY2024.
The whole theme swung hardest in 2022: 10 of 84 companies on the "Worse" side.
52 other companies' latest entry also says "Restated".
- FY2024RestatedAnnual report
「These estimates are reviewed in a timely and appropriate manner in response to design changes and additional contracts arising from changes in construction methods or the scope of work during construction, as well as market fluctuations affecting construction materials, subcontracting costs and other items.」
Continues to disclose that revenue recognition under the percentage-of-completion method involves uncertainty in estimates of total construction costs and the percentage of completion due to construction conditions and market fluctuations. - FY2022RestatedAnnual report
「The percentage of completion for satisfaction of performance obligations is calculated based on the proportion of construction costs incurred by the end of the consolidated fiscal year to total construction costs, using the input method, and revenue from completed construction is calculated by multiplying total construction revenue by the percentage of completion.」
Continues to disclose that, even after the revenue recognition accounting standard was adopted, estimates of total construction costs and the percentage of completion remain subject to uncertainty regarding construction conditions, market fluctuations and other factors. - FY2021First statedAnnual report
「The amount recognized in the consolidated financial statements for the current consolidated fiscal year was ¥95,845 million. The total estimated construction costs, which form the basis for recognizing revenue under the percentage-of-completion method, are estimated using the execution budget for each construction contract. However, they may fluctuate after work on a construction contract has commenced due to changes in construction conditions, the market environment and other factors, so the total estimated construction costs are reviewed in a timely and appropriate manner.」
For the first time, separately discloses this as a significant accounting estimate, stating that estimates of total construction revenue, total construction costs and the percentage of completion are uncertain and could have a material effect on the financial statements for the following consolidated fiscal year.