How useful is real estate accounting? As we all know the Real Estate industry is one of the booming sectors for the United Arab Emirates. As stated by the Khaleej Times, in 2019, more than 35,000 residential units were completed, and that has marked the highest number delivered in a single year in Dubai. Based on developers’ announced completion dates, 2020 is likely to be another record year for deliveries, adding to supply. Although the severity of the impact on Dubai’s real estate sector depends on the duration of the Covid-19 outbreak and the extent of government measures, it’s clear there will be some downside. Anyways to all of you out there, engaged with the Real Estate industry, it is always necessary to be aware of the changes and also advisable to take the guidance of professional experts who will assist in sustaining and growing your business. The professional experts of Horizon Biz Consultancy Accounting and Bookkeeping Services provide outstanding auditing and accounting services for the real estate sector.
Before we move further to discuss the accounting requirements, let us take a quick look into the important sector of the Real-estate so that we have a better picture in mind.
- Acquisition and construction of real estate
- Leasing or Subleasing of real estate
- Management of real estate
- Sale or Demolition of real estate
In all these above-mentioned phases, the accounting records are to be maintained adequately for the proper sustenance of the industry however difficult it might be. The services of an accounting expert could also assist in the application of the relevant Accounting Standards like investment property, Property plant and equipment etc. and also a number of new standards, interpretations or amendments to the existing standards. Some of them are as follows:
- IFRS 15, ‘Revenue from contracts with customers’
- IFRS 16, ‘Leases’
- IFRS 13, ‘Fair value measurement’
We understand you might not be an accountant, however, that doesn’t mean you should skip accounting work in your business. With our valuable and professional services of Horizon Biz Consultancy Accounting and Bookkeeping Services and your investment, we assure your business to achieve supreme efficiency and profitability.
Real Estate Industry & IFRS 15
Let’s see how the Five-Step Model in IFRS 15 could be implemented in the real estate industry.
- IDENTIFY THE CONTRACT WITH A CUSTOMER: Firstly identify the contract with the customer along with the changes & modification.
- IDENTIFY THE SEPARATE PERFORMANCE OBLIGATIONS IN THE CONTRACT: A contract might include various activities, each of which to be considered as a separate performance.
- DETERMINE THE TRANSACTION PRICE: Based on the contract generated, the business will determine the transaction price.
- ALLOCATE THE TRANSACTION PRICE TO SEPARATE PERFORMANCE OBLIGATIONS: in the real estate industry, the set transaction price needs to be allocated different performance obligations.
- RECOGNIZE THE REVENUE GENERATED: understand the different revenues generated to arrive at the final value.
Let us understand the importance of accounting for real estate. There are a lot of benefits of availing the services of a professional expert for the maintenance of the accounting work in the business. Some of which are listed below:
- Accuracy and Minimizing errors
When the accounting process is managed in-house, there are high chances of errors and this is where we could reduce the chances of error by using the service of a well-versed expert.
- Well Managed Accounting Process
The accounting books will be maintained and carrying out this activity on a regular basis will help your business to know the level of revenue generation, and profits earned.
- Detection of Fraudulent Activities by reducing the inherent risk
An expert accountant will always be able to analyze the loopholes in the current practices and procedures of the business. They would also assist, in providing steps to reduce the inherent risk.
- Updates in Policies, Standards & Technology
A professional expert will always be up to- date with the amendments in policies and standards. They would also suggest the updates in any new accounting software which would help the business.
- Hassle-free Tax Treatment
Paying off tax on time will help any business to earn a good reputation in the eyes of the law. By maintaining relevant documents that are audited, the well-versed services of an accountant will always be helpful in paying off taxes.
How Can We Help?
Get Your Free Meeting from Horizon Biz Consultancy to Know our Real Estate Accounting Service.
Horizon Biz Consultancy is experienced in real estate accounting services, company setup/business consultation, Outsource payroll, business, trading license, Tax consultation, CFO services and many other services too. Our UAE based qualified consultants, auditors and accountants are experienced working with many small and leading businesses/companies and organization.
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