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Hi Mike,
I will appreciate if you could help me with the following queries on the construction contract.
1- Suppose contract price is $100 Million and the cost is $50 Million, if 10% of the work is completed by the 1st yr end, and it isn’t sufficient to be able to predict the ultimate outcome.
Thus, in year 1 revenue and the cost we recognize will be $ 10million right so that the profit recognized becomes 0?2- what if we predict loss when the work completed isn’t sufficient enough to be able to predict the outcome, do we recognize the loss in full even in such case?
1) – Yes
2) – Yes – so revenue would be $10 million and Costs would be (say) $12 million where an overall loss of $2 million is predicted at this early stage of completion
Thanks Mike. There are not enough words on this planet to thank the generosity and efforts of yours and the opentuition.com to enlighten the knowledge & lives of many learners, such a s myself!
Cheers 🙂
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