Salini Test

The Salini test is a method used to determine whether a contract for the construction of a work, like a building or infrastructure project, should be classified as a "construction contract" under accounting standards. It evaluates whether the work involves significant physical work or the transfer of goods, and whether the contractor bears substantial risks related to the project’s cost and completion. Essentially, it helps distinguish construction contracts from other types of agreements by analyzing the nature of the work, risk distribution, and the contractor’s role to ensure proper financial reporting and classification.