- This topic has 1 reply, 2 voices, and was last updated 9 months ago by P2-D2.
- You must be logged in to reply to this topic.
ACCA Webinars: How to earn marks in Strategic Professional Exams. Learn more >>
20% off BPP Books for ACCA & CIMA exams - Get BPP Discount Code >>
Here is a problem from Kaplan:
On 1 January 20X1 Amir entered into a contract with a customer to
construct a stadium for consideration of $100m. The contract was
expected to take 2 years to complete.
At 31 December 20X1 Amir had incurred costs of $24m. Costs to
complete are estimated at $20m. In addition to these costs, Amir
purchased plant to be used on the contract at a cost of $16m. This
plant was purchased on 1 January 20X1 and will have no residual
value at the end of the 2 year contract. Depreciation on the plant is to
be allocated on a straight line basis across the contract.
Amir measures progress on contracts using an output method, based
on the value of work certified to date.
At 31 December 20X1, the value of the work certified was $45 million,
and the customer had paid $11.4m.
I am struggling with the accounting entries that will be needed for these transactions (however, without accounting entries, the answers are understandable for me). Could you help me?
If you make an attempt at the entries then I can gladly help with where you are going wrong.