I am having a tough time understading where W2 for the “amounts due to customers” actually goes in the BS of the entity:
cost to date + attributable profits – amount invoiced=amount due from customers?
I am generally having difficulties making a posting scheme for the recording of revenue, costs and receivables of a construction contract. Can you help me with the credit/debit entries for example 2 in chapter 13, ias 11?
i am confused by the “costs incurred to date” and (% of completion * total costs) concept? expense is a part of the income statement, income statement accounts show ACTUAL changes relating to the year in question so a company should only be posting incurred costs regardless of the % of completion – what if %*predicted costs was 300,000 but incurred costs were 580,000? If realized, REAL incurred expenses for the period are 400,000 but you are stating that based on % of completion the expenses are 412,700 (65%*total predicted costs) where does the difference (12,500) go? or to simplify, if the company has incurred costs (and these costs must be posted as a liability of some accounts in the BS as a credit entry, in order to make a debit entry for the expense?) of 400,000 how do they RECORD expenses in a different amount? in that sense, does that mean that the prediction of expenses was bad? 400/750 = 53%, not 55%. shouldn’t then the recognized revenue be 533,333?
You must be logged in to reply to this topic.