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construction contract

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › construction contract

  • This topic has 2 replies, 2 voices, and was last updated 13 years ago by QIN.
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  • Author
    Posts
  • June 6, 2012 at 7:16 am #53147
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    June 2010 Dune Q2 point vi the construction contract part

    When I include cost of construction contract into cost of sale, instead of 40,000×30%-2,400=9,600 why I cant calculate as below
    cost to date 8,000
    plant depr 3,000
    Total to COS 11,000

    I cant think out where I am wrong 🙁

    Another qn, for finance cost, why div paid 10,000 cant be included?

    June 6, 2012 at 10:27 am #99276
    Najiya
    Member
    • Topics: 1
    • Replies: 93
    • ☆☆

    revenue and costs of a construction contract should be recognised according to the stage of completion of the contract……..IAS 11
    % of completion given in the qn – 30%.
    Total revenue = 40,000 (given)
    Total costs = 32,000 (see below)

    in the IS
    revenue = 30% * 40,000 = 12,000
    cost of sale = 30% * 32,000 = 9,600

    total costs
    costs to date = 8,000(given) + plant depn (12,000 – 3,000)*(6/18)
    =11,000
    further costs to complete =15,000(given) + plant depn (12,000 – 3,000)*(12/18)
    =21,000
    total costs = 11,000 + 21,000 = 32,000

    For the joint stock company, paying dividends is not an expense; rather, it is the division of after tax profits among shareholders….(from Wikipedia)

    June 6, 2012 at 12:55 pm #99277
    QIN
    Member
    • Topics: 63
    • Replies: 176
    • ☆☆☆

    wow, my mentor, so clear for both, wrote down on my paper. Thank you so much 🙂

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