Contract liability and backlog (TFRS 15)

Extracted from Real Estate Project Accounting Handbook · Appendix C Template 3 Revenue Recognition
Example from Template 3: 7 units of the sample project, 1 unit transferred, revenue recognised on the ownership transfer day

Total sales value–
Revenue recognised (transferred)–
Remaining contract liability–
Backlog awaiting transfer–
Cash to collect on transfer day–

By unit (THB)
Unit ID	Type	Selling price	Booking deposit	Contract deposits	Cumulative down payment	Status	Contract Liability
							–
							–
							–
							–
							–
							–
							–

Summary by status
Status	Unit	Sales value	Cash received

Results are calculations for learning purposes. The figures entered are hypothetical examples, not real project data.

Principle

Booking deposits, contract deposits and down payments received before transfer are a contract liability, not revenue.
Revenue from the sale of condominium units is recognised at the point in time when ownership is transferred, which is when control is handed over.
On transfer, close the contract liability for that unit to revenue and collect the remaining balance on transfer day.

Reconcile the contract liability by unit to the general ledger at the end of every month (see the monthly closing checklist, section on receivables and contract liability).

Contract liability and backlog (TFRS 15)

Principle

Tools to use together