Hello, I'm a little confused on the method you've shown to calculate Revenue & Cost.
I understand it, but don't know when to use your method and the other method (where you calculate one as a balancing figure of the other and the total expected profit x % completion).
They seem to give different answers.
Also, wrt rectification costs, the technical article on ACCA says to write them off in the period they occur, where as you would include them in the cost recognised at 100%.
So, using the other method, would all period specific costs be written off also?
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Construction contracts
10y ago#1I think my method causally does write off the rectification costs in the year that they occur
As to which method to use to arrive at profits to be recognised, you need to follow the instructions from the question
If those instructions are not totally clear, then I suggest that any method will do - so long as it's logical!
Hope that helps!
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