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Revenue

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Revenue

  • This topic has 1 reply, 2 voices, and was last updated 9 months ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 1, 2022 at 7:22 pm #654736
    suleymanabuzerli
    Member
    • Topics: 84
    • Replies: 32
    • ☆☆

    Yling Co entered into a contract which is expected to last 24 months on 1 January 20X4.
    The. The fixed price which has been agreed for the contract is $5 million. At 30 September
    20X4 the costs incurred on the contract were $1.6 million and the estimated remaining
    costs to complete were $2.4 million. On 20 September 20X4 Yling Co received a payment
    from the customer of $1.74 million which was equal to the total of the amounts invoiced.
    Yling Co calculates completion of the contract based on the percentage of the project
    certified as completed. At 30 September 20X4, the percentage certified as completed to
    date was 38%.
    What amount would be reported in Yling Co’s statement of financial position as at
    30 September 20X4 as the contract asset arising from the above contract?
    ?? Nil
    ?? $160,000
    ?? $800,000
    ?? $200,000

    I can not undestand that why contract asset is calculated with:

    $160,000
    Contract asset:
    Revenue recognised to date (5m * 38%) =1,900
    Less amounts invoiced (1,740)
    =160K

    But contract asset have standard formula:

    Cost incurred+expected profit(contract price-cost incurred-cost to completed)*%-amount invoiced.

    please help.

    May 5, 2022 at 4:41 pm #654979
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6472
    • ☆☆☆☆☆

    Hi,

    There have always been two ways for calculating the contract asset but from the September sitting onwards the only acceptable one will be the one used in the answer.

    Thanks

  • Author
    Posts
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