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in the statement of prft n loss….we calculate revenue – cost by multiplying each wid % of completion =gross prft…in this d cost we take is cost to date + cost to complete ryt….but i hav seen in some sums where they hav taken only d cost to date n * wid % of completion….cost to complete in nt taken…y is it ?
n also in some sums…they find d cost as a balancin fig…
revenue * %
– cost (bal fig)
—————-
prft * %in dis fig of cost sometimes doesnt match when i multiply % of completion * (cost to date+cost to complete)…why is it ?
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its been doing a number on me too…..read the ACCA article on their website you will understand abit
Your second problem is probably because in the OT lectures there is one question where a loss is forecast. In that question, the costs to be recognised is a balancing figure.
I don’t know why in your first question you say there are some questions where “Costs to complete” are not included ….unless it’s because the contract is in its early stages and is not sufficiently progressed to ( I’m quoting Mike! ) “be able to predict with reasonable certainty the ultimate outcome of the project”!!!!
In that situation, we need to calculate revenue in the usual way and then recognise costs as the same figure as revenue so that no profit is recognised
I think!
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