F7 Chapter 24 Questions
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hello, in question 4 i understand all of the steps except that i dont know how to find the loss of ($260000), to get the balancing figure of costs ($341000)
Costs to date $3,700,000
Costs to complete $760,000
Total costs $4,460,000
Contract revenue $4,200,000
Overall loss $260,000
There is a misprint in the requirement – the question asks for costs in 2013 and it should be 2014
OK?
but i can’t understand this question 4 because
revenue(42*40%)=16.8 revenue(42*75%)=31.5
cost(36*40%)=14.40 cost (44.6*75%)=33.45 =33.45-14.40=19.06answer
profit =2.4 profit =1.95
kindly help in this question
There are a number of posts on this thread dealing with this question 4 calculations
Putting it very simply, an overall loss on the contract is forecast so that loss needs to be recognized in full as soon as it’s forecast
OK?
hi can somebody explain For qn 1, how to get the costs 1,920,000? the cost incurred to date is 1.6mil & cost to be complete was estimated 20mil.
and one more qn for qn1, why the year 2 costs recognised need to minus 1,920,000 ( year 1 cost)?
Because the costs calculation is cumulative so, if we have recognised $1,920 costs in year 1, we can’t recognise it again in year 2
OK?
8% of $24 million – no profit is to be recognised until the contract is at least 25% complete so, if we’re recognising $1,920 revenue, then we have to recognise $1,920 costs
Hello Sir
For the ques 1 the total costs is 21000000..how we get this?? Help Please
Costs incurred ($5 million) + costs to complete ($16 million)
OK?
On question 4 I got $1905 but the right answer should be $1970. I cannot understand why I got a different result because it is similar to question 1 that I got right.
My calculations are:
(1600+2000)x40%=1440
(3700+760)x75%=3345
3345-1440=1905
Because an overall loss is forecast?
I need to change the question requirement anyway! The question asks for the costs in the year to 31 October 3013 and the answer to that should be $1,440
The question was intended to be for the year to 31 October, 2014 in which case the answer is correctly identified as $1,970
Ok. But it’s still not clear to me why I got $1905 instead of $1970. What is wrong with my calculations (in my previous post), please?
Because an overall loss is forecast! Calculate the loss, put that figure in the bottom line of working W1, put in the missing figure for costs and then compare that with the costs figure for year 1
Hi,
I dont understand how this figure in question 4 came about… the $3,410 ( balancing figure) please explain
Revenue recognised is 75% x $4,200,000 = $3,150,000
An overall loss is forecast on the contract of $260,000
If we recognise revenue of $3,150,000 and we recognise a loss of $260,000, how much are the recognised costs?
need help regarding question 2
how to solve it sir ?
Revenue recognised 13.2
Costs recognised 11.55
Profit recognised 1.65
Costs to date 10
Profit recognised 1.65
Amounts invoiced (13)
Due from customer (1.35)
Amounts invoiced 13
Amounts received (5)
Due from customer 8
Net amount due from customer 6.65
Thanks!
is’t it due to customer because it’s negative(1.35)
Yes!
Help! Can someone please work out questions 2, 3 and 4 please? F7 chapter 24 questions on contracts (IFRS 15)
Hello, can someone post how they come to the answer 4,380, Thanks
to question 1
8% of $24m = $1.92 revenue recognised
No profit recognised because less than 25% complete, so
Costs recognised $1.92m
Year 2 30% complete
30% of $24m = $7.2m
30% of $21m (total costs) $6.3m
But, of that $6.3m, $1.92m was recognised in 2014
So contract costs in 2015 must be $6.3m – $1.92m = $4,380m
how do you get the costs in year one of $1.92 because i am getting $288000
8% of $24m = $1.92 revenue recognised
No profit recognised because less than 25% complete, so
Costs recognised $1.92m
question 4, i think u ask for 2014 cost instead of 2013, there should be a typo there
but i got cost recog $1730 for 2014 and $1440 for 2013 none of them are answer…exam coming =.=
question 2 i got 6.45mil
question 1 why not 6300?
(cost incurred to date + estmate cost of completion) times 30%
or even 4700 by minus previous year cost 1600
Because the question asks for the costs recognising only for the year ended 31 August 2015, not the accumulated costs.