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Hi Sir ,
I wanted to know in Q2.Financial statement why depreciation is charged when calculating cost to complete and estimated cost in Dune Q (june 2009) whereas in Pricewell question we are not calculating depreciation we are only taking the value of plantIt depends which working you are doing – W1 is the calculation of the attributable profit and ( if I remember correctly ) we can calculate the forecast profit be looking at the contract value and deducting all the costs which will be incurred. Having calculated the overall profit, the question then tells us that profit is recognised on the basis of the percentage of work completed.
In W2, we are looking at the receivable from the customer and the basis of that calculation is “Costs incurred to date (including the depreciation of the plant) plus attributable profit (from W1) less amounts invoiced
I think the only difference is in how the examiner directs you in the calculation of the profit to be recognised
OK?
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