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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Contract Asset
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
Hi,
I’d use the first one as it is the most up to date method.
Thanks