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ok thanks, i might just get a basic scientific calculator then, save my money too haha
Haha cool cool, there’s bug in the answer then. Thanks again for your precious time
Oh…so we don’t even have a line saying ‘investment ‘at all in statement of financial position? Ok
and minus the investment income 4%
1/5 2mil
1/7 4mil
sept stopped
1/10 restart1/12 nil
investment income = 2mil*2/12*0.04+4mil(2/12+2/12)*0.04
=13333.33+53333.33=66666.66
borrowing cost-investment income=660,000-66666.66=$593,333i think the correct working is:
borrowing cost
1/5 = 6mil
1/7= 14mil
sept work stopped
1/10 = work restart
complete on 1/2Total borrowing cost to be capitalised:
6mil*2/12*0.06+20mil*(2/12+4/12)*0.06= 60,000+600,000=$660,000Found it , last 3 Min of ur first construction contract lecture. Yea I missed it. Thanks for your patience haha
we use the forecast method when there’s a lost recognised
or else stick to your formula right?
i think this make sense as we need to recognised the lost in full to have a true and fair view (reduce penumbral area of divergence possibilities)
i meant i know how 150,000 come from but i not quite understand it.
your lecture say
cost recognised is general (cost incurred to date + estimate cost of completion) * % of completion
+ specific cost related to that period 100%thus i use the calculation and reach 1730,000
why this time round we use the forecast total lost (1600000+550000)-full contract price?
another question
in a construction that is 80% complete, with following info
contract price $2mil
cost incurred to date $1600,000 includes $50,000 specific cost
estimate cost to complete $550,000what is cost recognised?
answer says $1750,000i thought is ((1600,000-50000)+550,000)*0.8 + 50,000 = 1730,000?
yes yes i see, i didn’t include the specific cost at the second part of the question
I see, I thought creative accounting normally means try to ‘hide’ something . I tend to link that to innovative thinking.
Thanks again Mike.
I only found your web few weeks ago, I finished your lecture series but not the notes yet. Which I don’t think I have enough time now to go into very details.
Anyway, this web going to help me sail thru other papers next year, and hopefully F7 next week.
I am self studying normally and failed once, until I found your web I see the light
ok i got it, the standard says profit not recognised until sufficiently advanced to be able to predict, ie even the progress is 90% and it predict to make a loss, we won’t recognise it still right? and the cost will match the revenue right?
answers:
a) 569000
b) 407000
c) 379000
d) 541000working:
payable b/f= 79000cost + profit = selling price
cost (100) + profit (33.33) = selling price (133.33)
profit = 560,000 * 33.33/133.33= 140000
cost = 560000-140000=420,000closing inventory 80,000
increased 100%, thus 40,000total purchase 460,000
credit side t balance 79,000+460,000=539,000
debit side c/f = 160,000
thus cash = $539000-$160,000=$379,000 (c)
am i right? so ignore the bad debts as it is for receivables calculation rightok, so ie increment book value of 40,000, thus cost 800,000+40000=840,000
divide by revised 5 yr = 168000, my logic on right track right? thanks Prof Mikethe answer in mcq says 200,000rev and 200,000cost thou
and no statement saying that when is the profit/loss should be recognisedso i am on the right track and should just ignore this right?
