• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

MCQ – Contruction Contract

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › MCQ – Contruction Contract

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 3, 2017 at 6:47 pm #370831
    m.a.w
    Member
    • Topics: 3
    • Replies: 2
    • ☆

    Dear Mike
    I am practicing MCQ and I came across the following:

    The total contract revenue was $50m and construction expected to be completed on 30.09.20×4.
    Costs to date are:
    Materials, labour and OH $12m
    Special plant acquired $8m

    The sales value of the work done at 31.03.20×3 has been agreed at $22m and the estimated cost to complete (excluded plant depr) $10m. The specialist plant will have not residual value at the end of the contract should be depreciated on a monthly basis. The company recognise satisfaction of performance obligations on the percentage of completion basis as determined by the agreed work to date compare to the total contract price.

    What is the profit to date on the contract at 31.03.20×3?
    Option:
    A – $8.8m
    B – $13.2m
    C –$11.44m
    D – $10m

    My answer was:
    As at 31.03.20×3 – completion % = 22/50 = 44%
    Rev recogn $22m
    Cost recogn: ($12m + $10m+$2m) x 44% ($10.56)
    Profit recog $11.44

    Depr calculation – 01.10.20×3 to 31.03.203 = 6 months
    $8m/2y x 0.5y $2m

    However, the revision book indicate as correct answer A and not C. The difference is in the way that the depreciation is calculated.

    Am I doing something wrong?

    Many thanks,
    m.a.w

    February 3, 2017 at 8:03 pm #370963
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22703
    • ☆☆☆☆☆

    Wouldn’t it have helped me if you’d given me the date the contract started and the date the plant was acquired?

    However, with what incomplete information available to me, here goes

    Total costs are $12 to date, $10 to complete and $8 plant

    That gives us a total cost of $30 and therefore a profit of $20

    44% of $20 is $8,800

    The working that takes the total costs into account on a percentage basis must be inferred / insinuated by the wording in the question “… compare to the total contract price” with emphasis on “total”

    OK?

    In future, please give me full information and, with the information that you DO give me, can you make a bit more effort to get the transcription correct?

    “… Depr calculation – 01.10.20×3 to 31.03.203 = 6 months” Does this make sense to you?

    February 4, 2017 at 2:58 pm #371049
    m.a.w
    Member
    • Topics: 3
    • Replies: 2
    • ☆

    Dear Mike,

    Many thanks for your response and apologies if my transcription wasn’t the best.

    February 4, 2017 at 6:45 pm #371065
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22703
    • ☆☆☆☆☆

    No worries – I got there in the end!

    You’re welcome

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Ken Garrett on Digital strategy – CIMA E3
  • arjunsanthosh on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • cBarsoum on Audit Risk – ACCA Audit and Assurance (AA)
  • allistair.a@gmail.com on Digital strategy – CIMA E3
  • John Moffat on Statement of Cash Flows (part b) Example 1 – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy