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in the examples given you get two values for stat of financial position, one is the receivables amount and the other “amount due from customers”. I do not understand this latter value. any help?
Working 2 is like “unbilled work in progress” and is different in nature than working 3 – accounts receivable / debtors
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????11- Construction contract
How to calculate the contract cost?
when we calculate the contract cost is:
Total contract cost ( x % of completion)
add foreseeable losses (estimated profit x ?%(why this propotion is take the 100% minus the % of completion ? and why not based on the % of completion?)my problem is how to calculate the foreseeablke losses?
Please be answer . Thank YouWhere the contract is facing an overall loss, then the full amount of the loss should be recognised immediately. Therefore, in working 1, enter the revenue recognised ( % complete x contract value ), then put in the last of the three lines in working 1 the FULL amount of the loss which is forecast. Line 2 ( costs recognised ) now becomes the balancing figure
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