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Hi Mike,
Just double checking this practice question I think for the project B there is an amendment that should be done in the answer as far as I understand the cost recognized should be 550 (is the 50% of 550 cost @ date + 550 estimated cost to complete the work)instead of 600, is that correct?
The figures I got are as follows:
revenue recognized 500 cost recognized (550)= loss recognized (50)
cost to date 550 attributable profit (50)= 500
amounts invoiced (475)
Amounts due from costumers 25Costs to date were $550? And costs to complete were $550? And contract value was $1,000?
Am I right so far?
So what’s the overall loss?
If we are to recognise $500 revenue and at the same time acknowledge an overall loss, then how much do we need to recognise as costs?
Have you watched the lecture dealing with anticipated losses?
Yeah that’s right I forgot that in case there is a loss recognized in the period it should be stated in the current period, instead of considering the % of the cost!!
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