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P2-D2 wrote:Verge entered into a contract with a government body on 1 April 2011 to undertake maintenance services on a
new railway line. The total revenue from the contract is $5 million over a three-year period. The contract states<br>that $1 million will be paid at the commencement of the contract but although invoices will be subsequently sent<br>at the end of each year, the government authority will only settle the subsequent amounts owing when the<br>contract is completed. The invoices sent by Verge to date (including $1 million above) were as follows:<br>Year ended 31 March 2012 $2·8 million<br>Year ended 31 March 2013 $1·2 million<br>The balance will be invoiced on 31 March 2014. Verge has only accounted for the initial payment in the financial<br>statements to 31 March 2012 as no subsequent amounts are to be paid until 31 March 2014. The amounts of<br>the invoices reflect the work undertaken in the period. Verge wishes to know how to account for the contract to<br>date.<br>Market interest rates are currently at 6%. (6 markP2-D2 wrote:Verge entered into a contract with a government body on 1 April 2011 to undertake maintenance services on a
new railway line. The total revenue from the contract is $5 million over a three-year period. The contract states<br>that $1 million will be paid at the commencement of the contract but although invoices will be subsequently sent<br>at the end of each year, the government authority will only settle the subsequent amounts owing when the<br>contract is completed. The invoices sent by Verge to date (including $1 million above) were as follows:<br>Year ended 31 March 2012 $2·8 million<br>Year ended 31 March 2013 $1·2 million<br>The balance will be invoiced on 31 March 2014. Verge has only accounted for the initial payment in the financial<br>statements to 31 March 2012 as no subsequent amounts are to be paid until 31 March 2014. The amounts of<br>the invoices reflect the work undertaken in the period. Verge wishes to know how to account for the contract to<br>date.<br>Market interest rates are currently at 6%. (6 mark
