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In this question, why is the cost of sale calculated as [45%*(176+164)] and not (176-68)?
I do understand where the 45% comes from.Q:
Total fixed contract price 380
Costs incurred to date 176
Budgeted future costs to completion 164
Invoices issued 160
Cash received from the customer to date 144Amounts recognised in profit or loss in the 20X1 financial statements:
Contract revenue 76
Contract costs 68It is company policy to calculate satisfaction of performance obligations based on the work certified as a proportion of total contract price. Work certified as at 31 December 20X2 was $171m.
Required
(a) Prepare relevant extracts from the statement of profit or loss and statement of financial position for the year ended 31 December 20X2.
Rebecca – have you watched the video lecture on this and / or read the course notes and worked through the examples?
Clearly, you haven’t
So I’m going to ask you to do that for me and then, if you still have a problem understanding why it’s 45% x (176 + 164), let me know and I’ll clear it up for you
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