Published : Wednesday, August 10, 2011 00:00
Written by : KRISTA ANGELA M. MONTEALEGRE [ manilatimes.net ]
LISTED property developers welcomed the decision of the Securities and Exchange Commission to defer the implementation of accounting standards that would have required a new method of recognizing revenues by next year.
The corporate regulator postponed the implementation of the International Financial Reporting Interpretations Committee 15 or IFRIC 15. The change in accounting methods would have required real estate firms to recognize revenues upon completion or turnover of units instead of the current practice of percentage completion of projects.
“The deferment will give all parties the chance to carefully study the revenue recognition rules and consider their broader implications on the real estate industry in the Philippines,” Jaime Ysmael, Ayala Land Inc. chief financial officer, said in a text message.
“I think everybody will probably need more time to adjust to this. It’s something we have been experiencing over the past decades and it will not be easy to change things,” said Rosaline Qua, SM Development Corp. president.
Eton Philippine Properties Inc. pointed out that IFRIC 15 is based on the US and European models, in which projects are constructed before sold. In contrast, projects in the Philippines are pre-sold before construction.
“[The deferral] also gives time to validate the real estate industry’s contention that IFRIC 15 allows the use of the percentage of completion method for projects where ownership is transferred to the buyer before completion. In the Philippines rights on the property can be transferred even before completion,” said Erwin de Pedro, head of marketing at Eton Properties.
Office and condominium landlord Megaworld Corp. said the changes in accounting standards would have a bigger impact on developers that have fewer projects in the pipeline.
“We have had very prolific developments in the last two years. So definitely, we will be able to book earnings every year,” Kingson Sian, Megaworld executive director and senior vice president, said in a previous interview.
Filinvest Land Inc. said adopting IFRIC 15 would hardly have any impact because of the short construction period for its units.
“It is different for other developers with high-rise buildings, especially those that are 40 floors or higher, where the construction period is usually over four years or more,” said Anabelle Arceo, FLI head for investors relations.
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