Verge Q31 (b) BPP Kit

Hi Sir,

I’m very muddled up on this one.

I understand the $1m would be a contract liability for the company as they have received money before completion and thus, a significant component exists. CR Contract Liability $1m and DR Cash $1m as at inception

But for the remaining amounts, I don’t understand why they are treated as significant components or discounted if the government won’t be paying the rest of the money until the end of the project when it’s completed? I would’ve done CR Rev $1.8m, DR Receivables $1.8m without time value of money

Please can you advise?

Thank you