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Bridgenorth Co in Bpp

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Bridgenorth Co in Bpp

  • This topic has 5 replies, 3 voices, and was last updated 1 year ago by P2-D2.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • March 3, 2021 at 1:59 am #612873
    Eniigma
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    Bridgenorth has undertaken a $5million contract to repair a railway tunnel.The contract was signed in 1 April 20X8 and the work is expected to take two years.This is a contract where performance obligations are satisfied over time and progress in satisfying performance obligations is to be measured according to % of work completed as certified by a surveyor. Bridgenorth has an enforceable right to payment for performance completed to date

    At 31 December 20×9 the details of the contract were as follows
    —————————————————–20X9———20X8
    Total contract price—————————5000——–5000
    cost to date————————————3600——–2300
    estimated cost to completion————–700———2100
    work invoiced———————————3000——–2000
    cash received——————————–2400——–1500
    %certified complete————————–75%——40%

    What is the contract asset to be recognised at 31 December 2019 ?

    Answer: Cost to date: 3600
    Profit to date: 525 (5000-400)*0.75
    Amounts invoiced: (3000)

    Asset = 1125

    But in similar situations almost all solutions were: Revenue to date: 5000*0.75 = 3750
    Amounts invoiced: (3000)

    So what is the calculations based on ? I though it was recognition basis (Output vs Input method), but apparently not.

    March 6, 2021 at 8:23 am #613695
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6460
    • ☆☆☆☆☆

    Hi,

    Is this not an old question and the answer you have is under the older rules for accounting for this type of transaction?

    Thanks

    March 8, 2021 at 12:40 pm #613937
    Eniigma
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    Hello,

    Well question is from the latest BPP book (Sep. 20 – Jun. 21), maybe they have not updated answers.

    March 13, 2021 at 7:34 am #614327
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6460
    • ☆☆☆☆☆

    That’s odd as we now look at revenue recognised less amounts invoiced.

    Thanks

    March 14, 2021 at 5:14 am #614376
    phuongmore
    Participant
    • Topics: 84
    • Replies: 85
    • ☆☆

    Dear sir the answer for questions Haverford Co (Mar/June 2018) applied the old method.And your lecturer for revision this question applied the old method also.What method should we apply for exam June 2021?Thank you

    March 17, 2021 at 7:36 pm #614632
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6460
    • ☆☆☆☆☆

    I’d apply the updated method.

  • Author
    Posts
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