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On 1 January 2014, Alan entered into a construction contract that is expected to last 24 months. The agreed contract price is $15 million. As at 30 September 2014, the costs incurred on the contract were $5 million and the estimated remaining costs to complete were $7 million.
On 20 September 2014, Alan received a payment from the customer of $7 million that was exactly the amount that had been invoiced as progress billings. Alan calculates the stage of completion of construction contract on the basis of progress billings as a percentage of contract price.
What amount would be reported in Alan’s statement of financial position as at 30 September 2014 for the amount due to? from customers on the above contract?
Answer is either 1200 000 liability, 1200 000 asset, 800 000 asset or 800 000 liability. may you explain me how the answer is arrived at?Dare I ask you to check your typing? My answer is not any of the four options that you have given me.
If it’s not your typing that is incorrect, can you let me know the ‘official’ solution and I’ll try to see how that has been arrived at
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