Application Of Financial Accounting Standards No.34 In The Recognition And Measurement Of Construction Services Business Income At PT. Star Angkasa Megantara Medan

Feb 27, 2025 by ADMIN 164 views

Application of Financial Accounting Standards No.34 in the Recognition and Measurement of Construction Services Business Income at PT. Star Angkasa Megantara Medan

Introduction

Income is a crucial indicator used to evaluate a company's performance. To ensure that the presentation of income is carried out fairly and appropriately, an accurate measurement method is needed and compliance with the principle of revenue recognition set by the Financial Accounting Standards (SAK) or the generally accepted accounting principles (GAAP). In contracting companies, revenue recognition for long-term construction projects is usually carried out by the percentage of completion. In this method, the approach used can be a physical approach or a cost approach to calculate the percentage of project completion.

The application of Financial Accounting Standards No.34 (PSAK No.34) is very vital in the context of revenue recognition in construction service companies such as PT. Star Angkasa Megantara. The percentage of completion methods not only provide a more accurate picture of the recognized income for a certain period, but also allow the company to harmonize the revenue generated at the costs incurred. That way, management can make better decisions based on relevant financial information.

Analysis of PSAK Application No.34

The application of PSAK No.34 is a strategic choice because it provides a realistic picture of project progress. In a dynamic construction world, changes in project plans or design can occur at any time. By using this method, PT. Star Angkasa Megantara can recognize income in accordance with the progress achieved. This will also increase the transparency of financial statements to stakeholders, such as investors and creditors, who seek to evaluate the company's overall performance.

The percentage of completion method is a widely accepted method in the construction industry. This method is based on the idea that revenue should be recognized as the project progresses. The method involves estimating the total revenue that will be generated from the project and then recognizing a portion of that revenue as the project progresses.

Significance of the Percentage Settlement Method

The percentage of completion method is a strategic choice because it provides a realistic picture of project progress. In a dynamic construction world, changes in project plans or design can occur at any time. By using this method, PT. Star Angkasa Megantara can recognize income in accordance with the progress achieved. This will also increase the transparency of financial statements to stakeholders, such as investors and creditors, who seek to evaluate the company's overall performance.

The percentage of completion method also provides a more accurate picture of the company's financial performance. By recognizing revenue as the project progresses, the company can better reflect its financial position and performance. This is particularly important in the construction industry, where projects can be long-term and complex.

Challenges in Revenue Recognition

Although the percentage of completion method provides many benefits, its application is not free from challenges. One of the main challenges is the estimation needed to determine the percentage of completion. Inaccuracies in the estimation can cause improper recognition of income, which in turn can affect the company's overall financial performance. Therefore, it is essential for PT. Star Angkasa Megantara to have a strong internal control system and audit procedure to ensure that all measurements and estimations are carried out accurately.

Another challenge is the complexity of the method. The percentage of completion method requires a detailed understanding of the project's progress and the company's financial position. This can be a challenge for companies that have limited resources or expertise.

Conclusion

In the context of the application of PSAK No.34, PT. Star Angkasa Megantara shows a commitment to follow good accounting practices in the recognition and measurement of income. By utilizing the percentage of completion methods and ensuring accuracy in the estimation, the company can not only present transparent and timely financial statements, but also strengthen competitive positions in the construction industry.

Therefore, it is essential for companies to continue to update their understanding and training related to accounting standards in order to adjust to the development and challenges that exist. The application of PSAK No.34 is a critical aspect of financial accounting, and companies must ensure that they are in compliance with the standard to maintain transparency and accuracy in their financial statements.

Recommendations

Based on the analysis of the application of PSAK No.34, the following recommendations are made:

Continuously update understanding and training related to accounting standards: Companies must ensure that they have a strong understanding of the accounting standards and the methods used to recognize revenue.
Implement a strong internal control system and audit procedure: Companies must have a robust internal control system and audit procedure to ensure that all measurements and estimations are carried out accurately.
Ensure accuracy in estimation: Companies must ensure that their estimations are accurate and reliable to avoid improper recognition of income.
Provide transparent and timely financial statements: Companies must provide transparent and timely financial statements to stakeholders, such as investors and creditors, who seek to evaluate the company's overall performance.

By following these recommendations, companies can ensure that they are in compliance with the accounting standards and provide accurate and transparent financial statements to stakeholders.

Limitations of the Study

This study has several limitations. Firstly, the study is based on a single case study of PT. Star Angkasa Megantara, which may not be representative of other companies in the construction industry. Secondly, the study only focuses on the application of PSAK No.34 and does not consider other accounting standards that may be relevant to the construction industry.

Future Research Directions

Future research directions include:

Comparative study of accounting standards: A comparative study of accounting standards in different countries or industries can provide insights into the similarities and differences in accounting practices.
Case study of other companies: A case study of other companies in the construction industry can provide insights into the application of accounting standards in different contexts.
Development of new accounting standards: The development of new accounting standards can provide insights into the evolution of accounting practices and the challenges faced by companies in implementing new standards.

By following these research directions, researchers can provide a more comprehensive understanding of the application of accounting standards in the construction industry and identify areas for future research.
Q&A: Application of Financial Accounting Standards No.34 in the Recognition and Measurement of Construction Services Business Income at PT. Star Angkasa Megantara Medan

Frequently Asked Questions

Q1: What is Financial Accounting Standards No.34 (PSAK No.34)?

A1: Financial Accounting Standards No.34 (PSAK No.34) is a standard issued by the Financial Accounting Standards Board (FASB) that provides guidance on the recognition and measurement of revenue in the construction industry.

Q2: Why is the percentage of completion method used in the construction industry?

A2: The percentage of completion method is used in the construction industry because it provides a realistic picture of project progress. In a dynamic construction world, changes in project plans or design can occur at any time. By using this method, companies can recognize income in accordance with the progress achieved.

Q3: What are the benefits of using the percentage of completion method?

A3: The benefits of using the percentage of completion method include:

Provides a realistic picture of project progress
Increases transparency of financial statements to stakeholders
Allows companies to harmonize revenue generated at costs incurred
Provides a more accurate picture of the company's financial performance

Q4: What are the challenges in revenue recognition using the percentage of completion method?

A4: The challenges in revenue recognition using the percentage of completion method include:

Estimation needed to determine the percentage of completion
Inaccuracies in estimation can cause improper recognition of income
Complexity of the method requires a detailed understanding of the project's progress and the company's financial position

Q5: How can companies ensure accuracy in estimation?

A5: Companies can ensure accuracy in estimation by:

Implementing a strong internal control system and audit procedure
Ensuring that all measurements and estimations are carried out accurately
Continuously updating understanding and training related to accounting standards

Q6: What are the consequences of improper recognition of income?

A6: The consequences of improper recognition of income include:

Affecting the company's overall financial performance
Causing financial losses or gains that are not accurately reflected in the financial statements
Damaging the company's reputation and credibility with stakeholders

Q7: How can companies provide transparent and timely financial statements?

A7: Companies can provide transparent and timely financial statements by:

Implementing a strong internal control system and audit procedure
Ensuring that all measurements and estimations are carried out accurately
Continuously updating understanding and training related to accounting standards
Providing clear and concise information about the company's financial performance and position

Q8: What are the future research directions in the application of PSAK No.34?

A8: The future research directions in the application of PSAK No.34 include:

Comparative study of accounting standards in different countries or industries
Case study of other companies in the construction industry
Development of new accounting standards to address the challenges faced by companies in implementing existing standards