| Contract Assets and Liabilities |
4. Contract Assets and Liabilities
Contract assets consisted of the following at
March 31:
| | |
2025 | | |
2024 | |
| Retention receivables of construction contracts (note a) | |
$ | 1,605,163 | | |
$ | 1,961,870 | |
| Unbilled revenue of construction contracts (note b) | |
| 4,157,343 | | |
| 8,384,456 | |
| | |
| 5,762,506 | | |
| 10,346,326 | |
| Less: Allowance for credit losses | |
| (96,758 | ) | |
| (276,518 | ) |
| Total | |
$ | 5,665,748 | | |
$ | 10,069,808 | |
| | |
| | | |
| | |
| Less: Portion classified as non-current | |
| (1,029,078 | ) | |
| (1,350,413 | ) |
| Current portion | |
$ | 4,636,670 | | |
$ | 8,719,395 | |
Notes:
| (a) | Retention receivables included in contract assets represent the Company’s right to receive consideration for work performed and not yet billed because the rights are conditional on the satisfaction of the service quality by the customers over a certain period as stipulated in the contracts. Retention receivables, net from joint ventures was approximately US$524,150 and US$494,121 as of March 31, 2025 and 2024, respectively. The Company will be entitled to receive after 12 months, upon satisfaction of the service quality by the customers, retention receivables amounted to US$1,029,078 and US$1,350,413 as of March 31, 2025 and 2024, respectively. These amounts are classified as non-current. |
| (b) | Unbilled revenue included in contract assets represents the Company’s right to receive consideration for work completed but not yet billed because the rights are conditional upon the satisfaction by the customers on the construction work completed by the Company and the work is pending for the certification by the customers. The contract assets are transferred to the accounts receivable when the rights become unconditional, which is typically at the time the Company obtains the certification of the completed construction work from the customers. Unbilled revenue, net from joint ventures was both US$nil as of March 31, 2025 and 2024, respectively. All unbilled revenue is subsequently certified as of the date of this report. |
Activity in the allowance for credit losses consists
of the following for the years ended March 31:
| | |
2025 | | |
2024 | |
| Balance at beginning of the year | |
$ | 276,518 | | |
$ | 139,218 | |
| Net provision for allowance for credit losses | |
| 60,732 | | |
| 229,672 | |
| Recoveries | |
| (241,807 | ) | |
| (92,865 | ) |
| Exchange difference | |
| 1,315 | | |
| 493 | |
| Balance at end of the year | |
$ | 96,758 | | |
$ | 276,518 | |
Contract liabilities consisted of the following
at March 31:
| | |
2025 | | |
2024 | |
| Billings in advance of performance obligation under contracts (note a) | |
$ | 2,322,911 | | |
$ | 1,144,047 | |
Note:
| (a) | Net contract liabilities from joint ventures were US$359,629 and US$536,341 as of March 31, 2025 and 2024, respectively. |
Contract liabilities represent when the Company
receives advances from customers before the construction commences, this will give rise to contract liabilities. Advances from customers
of construction contracts are normally recognized as revenue according to the schedules of construction contracts. The movement in contract liabilities for the years
ended March 31 is as follows:
| | |
2025 | | |
2024 | |
| Balance at beginning of the year | |
$ | 1,144,047 | | |
$ | 923,474 | |
| Decrease in contract liabilities as a result of recognizing revenue during the year which was included in the contract liabilities at the beginning of the year | |
| (1,148,848 | ) | |
| (926,447 | ) |
| Increase in contract liabilities as a result of billings in advance of performance obligation under contracts | |
| 2,319,244 | | |
| 1,143,857 | |
| Exchange difference | |
| 8,468 | | |
| 3,163 | |
| Balance at end of the year | |
$ | 2,322,911 | | |
$ | 1,144,047 | |
|