Hampton Housing Ltd (HHL) is a land development company trading in the construction of resi­dential house and land packages in Sydney’s western suburbs. The company is currently developing a residential subdivision, and the total cost of the development has been estimated at $18 000 000. This is related to future house and land packages, none of which is yet available for sale. HHL treated these costs as an asset. 

 By 30 June 2017, HHL sold 40 house and land packages in a different subdivision for the finan­cial year. The total value of these packages is $15 000 000. The funds have not been received by HHL because it was arranged that payments would be received from various finance companies by the end of July 2017. HHL recognised the revenue in its income statement for the year ended 30 June 2017.

Required

Discuss HHL’s treatment of the development costs of $18000000 and the packages sold for $15000000. Are these treatments consistent with the Conceptual Framework and accounting standards? Explain.