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Contract Asset

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Contract Asset

  • This topic has 1 reply, 2 voices, and was last updated 9 months ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • October 30, 2021 at 7:12 pm #639501
    Gigakutkha
    • Topics: 21
    • Replies: 8
    • ☆

    Hi,
    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?

    .

    November 7, 2021 at 9:37 am #640143
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6165
    • ☆☆☆☆☆

    Hi,

    If you make an attempt at the entries then I can gladly help with where you are going wrong.

    Thanks

  • Author
    Posts
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