Reader Interactions
Comments
Leave a Reply
You must be logged in to post a comment.
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
isn’t this an onerous contract? and if yes why aren’t we making provision, instead of recognizing the loss
Hi, are there also lectures for Revenue Recognition for Statement of Finc Position? not sure why i cant find it. Revenue – Example 6 (loss making contracts) is the last video for the chapter.
Dear Sir,
Thanks for your lecture. I have the same issue with the above students. I don’t understand why you get 100% loss (5) then get cost -23. Please help us clarify.
Thanks,
Hung
Prudence ?
I don’t get how we can have our costs incurred to date as 23m as it is already given to us as 25m. Shouldn’t we add the the costs as 25m and then balance off to get the Revenue, which will then be 20m instead of the current 18m
yes this is very strange
Hi, in my opinion. Because we must recognise all loss in the first year of contract (Prudence), so:
31.12.X5
revenue 20X5: 40*45% = 18m
loss (total loss) = 40-25-20 = -5
cost (bal figure) = 18 – (-5) = 23m
31.12.X6
revenue 20X6: 40-18=32
loss = 0 (all loss is recognised in 20X5)
cost (bal figure) =32
to make your answer clearer, the cost/revenues in 20X6 are both 22 (not 32) to tie back to the totals in the question