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Forums › Ask CIMA Tutor Forums › Ask CIMA F2 Tutor Forums › Doubt about CIMA F2 CONTRACTS
Hi, I don´t understand why to get the amounts due from customers I need to add :
Cost incurred + Profit recognized
Why?
regards
AnaPatricia
Hi AnaPatricia,
Why would you not need to do this? You have entered a contract with a customer to build an asset that ultimately you are going to sell to them at a profit, so the baseline value of the asset will be the costs incurred in constructing it. As we’re then selling it at a profit then this is highlighting that the asset is worth more than that and so we add it on.
Thanks