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Sir , in working 1 from the note concerning contracts both for revenue , cost of sales and estimated profits.
In working 2, why are we using the cost to date , Same estimated profit and deduction of the amount invoiced to arrive at current asset?
I found at that the kaplan kit question / solution
The working 2 is to
Cost to date #
Profit to date #
Amount billed ( #)
Current assetWhen I use estimated profit I do not get the required current asset except when I calculate profit to date based on the worked certified compared to contract price . This is to give a % of the estimated profit as the contract progresses .
The recognised profit figure that you have calculated in working 1 is the same profit figure that you have in working 2 added to the figure for ‘cost to date’
Maybe you have miscalculated working 1 by using a base that is not specified – it may vary from question to question and is not always the percentage of work certified compared with contract price
Does that solve the problem for you?
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