Bridgenorth revenue in Bpp

1st example

Bridgenorth has undertaken a $5million contract to repair a railway tunnel.The contract was signed in 1 April 20X8 and the work is expected to take two years.This is a contract where performance obligations are satisfied over time and progress in satisfying performance obligations is to be measured according to % of work completed as certified by a surveyor. Bridgenorth has an enforceable right to payment for performance completed to date

At 31 December 20×9 the details of the contract were as follows
—————————————————–20×9———-x0x8
Total contract price—————————-5000——–5000
cost to date————————————-3600——–2300
estimated cost to completion————–700———-2100
work invoiced———————————3000——–2000
cash received——————————–2400——–1500
%certified complete————————–75%——-40%

What amount would have been included in trade receivables at 31 December 20×8?

Under p/l
revenue(5000*75%)=3750
cost of sales(3600+700=4300*75%)=3225
gross profit or profit recognised to date=525

Under SOFP
cost to date-3600
profit recognised to date-525
work invoiced—(3000)
CONTRACT ASSET=1125

Trade receivable(600)=work invoiced(3000) -(2400)cash received

Second example

Trial balance at 31 march 2017

on 1 October 2013 Pricewell entered into a contract to construct a bridge over a river. The
agreed price of the bridge is $50 million and construction was expected to be completed on 30
September 2015. The $14•3 million in the trial balance is:

materials, labour and overheads 12,000
specialist plant acquired 1 October 2013 8,000
payment from customer (5,700)
––––––
14,300
The sales value of the work done at 31 March 2014 has been agreed at $22 million and the estimated cost to complete (excluding plant depreciation) is $10 million. The specialist plant will have no residual value at the end of the contract and should be depreciated on a monthly basis. Pricewell recognises profits on uncompleted contracts on the percentage of completion basis as determined by the agreed work to date compared to the total contract price

Solution

cost to 31 march 20×7
material-12000
depreciation(8000/24*6)-2000
overall-14000

estimated cost excluding depreciation-10000
depreciation-6000
16000

from 1 october 20×6 to 30 september 20×8 24 month
from 1 october 20×6 to 31 march 20×7-6months-2000
from 31 march 20×7 to 30 september 20×8-18mosths-6000

percentage complete 22000/50000*100%=44%

2nd example
under p/l

revenue(50000*44%)=22000
cost of sales(16000+14000*44%)-13200
gross profit-8800

under SOFP
cost to date-14000
profit recognised-8800
cash received(payment from customer)-(5700)
trade receivable-17100

1st example
Under p/l
revenue(5000*75%)=3750
cost of sales(3600+700=4300*75%)=3225
gross profit or profit recognised to date=525

Under SOFP
cost to date-3600
profit recognised to date-525
work invoiced—(3000)
CONTRACT ASSET=1125

Trade receivable(600)=work invoiced(3000) -(2400)cash received or (payment from customer)

If you see in the first example work invoiced(3000) and cash received(2400) have been given and their difference will give me trade receivable, this is understandable.

in the second example, work invoiced not given only cash received(payment from customer 5700) has been given but how can i recognised trade receivable ?

2nd example SOFP
under SOFP
cost to date-14000
profit recognised-8800
cash received(payment from customer)-(5700)
trade receivable-17100

1at example? SOFP
Under SOFP
cost to date-3600
profit recognised to date-525
work invoiced—(3000)
CONTRACT ASSET=1125