• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

314 Haverford (Mar/Jun 18)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › 314 Haverford (Mar/Jun 18)

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • January 21, 2021 at 3:22 am #607370
    whateveritis
    Member
    • Topics: 11
    • Replies: 5
    • ☆

    Dear tutors,

    I have one problem with this question:

    (ii) During the year, Haverford Co entered into a contract to construct an asset for a customer, satisfying the
    performance obligation over time. The contract had a total price of $14million. The costs to date of
    $1·9million is included in the above trial balance. Costs to complete the contract are estimated at
    $7·1million.
    At 31 December 20X7, the contract is estimated to be 40% complete. To date, Haverford Co has received
    $1·4million from the customer and this is shown in the above trial balance.

    According to how I understand, this will create effects on AR as follows:

    DR AR 14000*0,4 = 5600
    CR Sales revenue 5600

    DR Cash 1400
    CR AR 1400

    The AR on SOFP is 5510. I think that the above entries have not been recorded so I add 5600 to and minus 1400 from the AR. However, the answer states that the AR is still equal to 5510. No adjustment is needed for the AR.

    I want to ask how I can point out whether the original number in the question needs to be adjusted or not because the question makes me misunderstand that the original number is affected by the notes.

    I look forward to receiving your answer.

    Thanks a lot.

    Have a nice week.

    January 23, 2021 at 9:37 am #607624
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7171
    • ☆☆☆☆☆

    Hi,

    You need to work out the overall expected profit on the contract, which I think is $5 million (14 – 1.9 – 7.1). You can then recognise the amounts on the SPL by taking 40% of the revenue, costs and profit.

    On the SFP you have a contract asset as we have the costs incurred to date, plus the profit to date, from which we subtract the cash received.

    Try and use this to see if you can get to the answer. If you are still struggling then please let me know.

    Thanks

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • mrjonbain on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on The nature and structure of organisations – ACCA Paper BT
  • OmarAlbeity on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Salimbek909 on The nature and structure of organisations – ACCA Paper BT

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in