Uncertainty in Progress and Cost Estimates under the Percentage-of-Completion Method
First written in FY2021. 6 of 12 entries say "Mitigated", first in FY2023. Latest entry: FY2026.
The whole theme swung hardest in 2024: 9 of 64 companies on the "Worse" side.
10 other companies' latest entry also says "Mitigated".
- FY2026MitigatedAnnual report
「Provision for loss on construction contracts 2,517 －」
The provision for loss on construction contracts fell from ¥2.517 million at the end of the previous period to zero at the end of the current period. Although uncertainty in construction cost and progress estimates remains, the provision has been eliminated as of the present time. - FY2025MitigatedAnnual report
「Provision for loss on construction contracts 2,517 －」
The provision for loss on construction contracts fell from ¥2.517 million at the end of the previous period to zero at the end of the current period. Although uncertainty in construction cost and progress estimates remains, the provision has been eliminated as of the present time. - FY2025-H1MitigatedAnnual report
「Provision for loss on construction contracts 2,517 －」
The provision for loss on construction contracts fell from ¥2.517 million at the end of the previous consolidated fiscal year to zero at the end of the current interim period. Although uncertainty in construction cost estimates remains, the provision has been reduced and eliminated as of the present time. - FY2024WorsenedAnnual report
「Provision for loss on construction contracts 1,635 2,517」
The provision for loss on construction contracts increased from ¥1.635 million at the end of the previous period to ¥2.517 million, and the risk of future losses due to uncertainty in construction cost estimates worsened during the current period. - FY2024-Q3MitigatedAnnual report
「Provision for loss on construction contracts 1,635 279」
The provision for loss on construction contracts decreased from ¥1.635 million at the end of the previous consolidated fiscal year to ¥279 thousand. Although uncertainty in construction cost estimates remains, the provision had decreased as of the end of the current quarter. - FY2024-Q2MitigatedAnnual report
「Provision for loss on construction contracts 1,635 1,200」
The provision for loss on construction contracts decreased from ¥1.635 million at the end of the previous consolidated fiscal year to ¥1.200 million. Although uncertainty in construction cost estimates remains, the provision had decreased as of the end of the current quarter. - FY2023MitigatedAnnual report
「For performance obligations relating to construction work under construction contracts and the provision of services, our Group determines that the obligations are satisfied over a period of time and recognizes revenue based on the progress toward satisfying those obligations. If actual results differ from the initial estimates, this may affect the consolidated financial statements for the following consolidated fiscal year.」
While revenue recognized based on progress increased to ¥2,399.8 million, the provision for loss on construction contracts decreased from ¥2.853 million in the previous period to ¥1.635 million. Although uncertainty in estimates remains, the provision has decreased. - FY2023-Q3MaterialisedAnnual report
「On the earnings side, gross profit margin declined by 5.8 percentage points year on year due partly to the completion by the previous period of highly profitable large water treatment system projects that benefited from cost reductions and higher costs for certain water treatment systems. However, each profit level from operating profit downward exceeded the same period of the previous year due to the effect of higher sales and other factors.」
Actual cost increases occurred for some water treatment equipment, and the provision for loss on construction contracts increased from ¥2.853 million at the end of the previous consolidated fiscal year to ¥61.850 million. The uncertainty in construction cost estimates has emerged in profit or loss. - FY2023-Q2MaterialisedAnnual report
「On the earnings side, sales increased in each business, but each profit level from operating profit downward fell below the same period of the previous year due partly to the completion by the previous period of highly profitable large water treatment system projects that benefited from cost reductions, as well as higher costs for certain water treatment systems and increased selling, general and administrative expenses.」
Actual cost increases occurred for water treatment equipment, and the provision for loss on construction contracts also increased from the same period of the previous year. The risk related to uncertainty in construction cost estimates has emerged in profit or loss. - FY2022RestatedAnnual report
「Estimates of total construction costs involve uncertainty due to changes in the external environment surrounding construction contracts, including sharp fluctuations in raw material prices, technical factors, specification changes, responses to customer requests, and construction delays by subcontractors.」
Even after applying the revenue recognition accounting standard, the risk remains that uncertainty in estimating the progress of performance obligations and total construction costs may affect future profit or loss. - FY2022-Q2ReframedAnnual report
「We applied the Accounting Standard for Revenue Recognition and other relevant standards from the beginning of the first quarter of the consolidated fiscal year. Revenue is recognized at the amount expected to be received in exchange for goods or services when control of the promised goods or services transfers to the customer. Accordingly, for construction contracts, whereas previously the percentage-of-completion method was applied to contracts for which the certainty of results was recognized for the completed portion of the work and the completed-contract method was applied to other contracts, revenue is now recognized over a period of time as the performance obligation to transfer goods or services to the customer is satisfied when control of the goods or services transfers to the customer over time.」
The accounting framework changed from the previous focus on the percentage-of-completion and completed-contract methods to recognizing revenue as performance obligations are satisfied under the revenue recognition accounting standard. The company disclosed that there was no impact on the consolidated financial statements for the current quarter. - FY2021First statedAnnual report
「Estimates of total construction costs involve uncertainty due to changes in the external environment surrounding construction contracts, including sharp fluctuations in raw material prices, technical factors, specification changes, responses to customer requests, and construction delays by subcontractors.」
The company disclosed ¥15,527 million in revenue recognized under the percentage-of-completion method and a ¥9 million provision for loss on construction contracts, and identified as a new risk the possibility that differences between estimated and actual progress and total construction costs could affect future profit or loss.