Comparison of methods of accounting for construction work on land according to Tax Procedural Law and accounting standards

With the broad adoption of FRS for LMSE in Turkey, evaluation of construction activities in exchange for land under the purview of Turkish Financial Reporting Standards (TFRS) and Financial Reporting Standard for Large and Medium Sized Enterprises (FRS for LMSE) has become even more crucial. When the national literature on construction works in return for land, which has a common application area in Turkey, is examined and it becomes clear that the studies conducted within the scope of TFRS and FRS for LMSE are restricted to construction contracting works while construction works in return for land are only evaluated from the perspective of tax laws. Regarding its presentation in financial reports, there is no scholarly research to be identified. How the cost of the land should be determined for the contractor in construction projects in exchange for land, which is a common practice in Turkey, as well as whether the relationship between the contractor and the land owner is a revenue-generating transaction for the contractor. If there is revenue, when and how much of it should be recorded. For the financial accounts to be presented fairly, clarification is essential. In this context, model ideas addressing the accounting and reporting transactions that must be conducted within the framework of building operations in exchange for land in accordance with the rules of TFRS and FRS for LMSE are intended to be presented. In this perspective, the research initially contained a conceptual framework for building activities, after which the subject was assessed in light of the tax laws, TFRS and FRS for LMSE regulations. The independent audit reports of the companies whose shares are traded in the BIST were examined, field experts were interviewed to ascertain the practices regarding the presentation of construction activities in return for land in financial reports and after that application suggestions based on TFRS provisions were developed. As a result of the study, the contractor completes the production work for the independent sections of the built structure that will be under his own responsibility, the independent sections that must be delivered to the land owner are service work for the contractor, the land share that belongs to the contractor is included in the financial statements as land cost over fair value, the revenue is reported at a specific time in the contractor's apartments, it has been evaluated that the flats to be owned by the landlord should be accepted as a construction contract, the revenue should be recognized over time and the profitability figure of each year should be shown in the Profit or Loss table in the relevant year.