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Xinyuan Real Estate Co., Ltd. Message Board

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  • john.hertford john.hertford Nov 9, 2012 10:51 AM Flag

    Gurnee said next few quarters won't be as good as the previous

    The percentage completion method is not per se required under the IFRS and GAAP standards, rather it is an option next to the completed contract method which is generally considered more prudent.

    The percentage completion method can only be applied if future economic benefits are certain which, depending on your cultural and legal sphere, can be subject to considerable interpretation. To take an example from the extremely prudent side of things here, in Germany you would only be able to apply the % completion method when the contract to be accounted for was closed with a public institution.
    However I do not have an issue with XIN using the % completion method and I am delighted that they prudently decided not to apply it to their US projects.

    Stan is correct Marcino, if XIN had used the completed contract method earnings would be considerable higher at this time of the year, however weak throughout the rest of the year. I personally dont think it make a difference for any serious mid to long term investor, at all.

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