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Contract Asset

This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.

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February 21, 2021 at 5:18 pm #611248
james8500
- Topics: 48
- Replies: 9
Hi

There seems to be two ways to recognise a contract asset, both producing different answers.

1) Revenue recognise based on % completion x
Amounts invoiced/received (x)
Contract Asset x

2) Costs incurred to date x
Profit based on % completion x
Less amts invoiced/received (x)
Contract Asset x

Which one is best to use in a question when info for both is available?

BPP practice kit Haverford Co p,137.

I calculated contract asset as: 5,600,000-1,400,000 = 4,200,000

Solution: 1,900,000 + 2,000,000 – 1,400,000 = 2,500,000
February 22, 2021 at 9:13 pm #611370
P2-D2
Keymaster
- Topics: 4
- Replies: 6222
Hi,

I’d use the first one as it is the most up to date method.

Thanks
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