TMS 11: Construction contracts standard and an application

Long-term construction contracts are subject to a special taxation system in the Income Tax Law by reason of commence and completion of construction works get into the different accounting periods. This approach of taxation delays the incomes and costs of the contract to the accounting period that construction completed, therefore it contradicts with the ?Periodicity Principle? of basic principles of accounting and causes problems about reporting and determining the allocation of incomes and costs to the accounting periods when the construction activity is carried out. In order to solve these issues, TMS 11 Construction Contracts was put into effect by Turkish Accounting Standards Board which aligned with International Accounting Standards.The theoretical part of this study describes the principles about accounting entry of long-term construction contract incomes and costs according to the Income Tax Law, and the innovations which is brought by the standard TMS 11 Construction Contracts has been examined. In the application part of the study, the financial statements and notes which are composed in accordance with the Income Tax Law, are compared with the financial statements and notes which are composed in accordance with TMS 11 Construction Contracts, and changes has been examined.