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Malik is a construction business, recognising progress based on work certified as a proportion of total contract value. Malik will satisfy the performance obligation over time. The following information relates to one of its long-term contracts as at 31 May 20X4, Malik’s year-end. $
Contract price 200,000
Costs incurred to date 130,000
Estimated cost to complete 20,000
Invoiced to customer 120,000
Work certified to date 180,000
In the year to 31 May 20X3 Malik had recognised revenue of $60,000 and profit of $15,000 in respect of this contract. What profit should appear in Malik’s statement of profit or loss as at 31 May 20X4 in respect of this contract?
my question is the answer they have deducted only 15000 from 45,000 the answer to be 30,000. why aren’t we deducting 60,000
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