- May 1, 2022 at 7:22 pm #654736suleymanabuzerliMember
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- 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?
I can not undestand that why contract asset is calculated with:
Revenue recognised to date (5m * 38%) =1,900
Less amounts invoiced (1,740)
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 #654979P2-D2Keymaster
- Topics: 4
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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.
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