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kindly provide an explanation as to how the amounts for “cost recognized- general” were arrived at for each of the 3 years . . .thanks. (IE yr 1 -240G, yr 2 -750G, yr 3 -800G)
Year 1 30% x ( 300 + 500 ) ( costs to date + estimated to complete )
Year 2 Revenue recognised is 65% x 1,000,000 = 650,000
Projected lost is 140,000
Therefore cost to be recognised must be, in total, 750,000Year 3 100% x 1,200,000 revenue recognised
Costs to be recognised 100% x 990,000 ( includes the 190,000 period specific costs from the first year ( 50,000 ) and the last year ( 140,000 ) )Does that help?
Thanks, I understand everything EXCEPT the projected loss of 140 . . . how did u arrive at that? was it as follows:
65% of 1 mill= 650g
less) the cost to date minus cost to completion = 500-600 = (100)
to give a cost recognized of (750,000)
Then, the (100) from above, along with the cost recognized of (40) to give (140)?No – it was by looking at the value of the contract ( $1,000,000 ) and deducting the costs already incurred ( 500 ) and to be incurred ( 600 ) and the period specific costs already incurred ( 40 )
All those costs add up to 1,140 …… deduct the contract value of 1 million and, Bob’s your uncle, there’s your projected loss of 140
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