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Revenue contracts

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

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 15, 2021 at 10:22 pm #631688
    FaridaGunay
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    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%.
    Solution;
    Contract asset:
    Revenue recognised to date (5m * 38%)= 1,900
    Less amounts invoiced (1,740)
    Answer 160

    But in Kaplan way we should do; (5m * 38%)= 1,9000
    Estimated cost+cost to date (2,4m + 1,6m)*38%=(1520)
    Then contract asset =1520+1600-1740=1380
    Can someone tell me how to calculate it and which one is correct?
    Thanks beforehand

    August 19, 2021 at 10:03 pm #632264
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6440
    • ☆☆☆☆☆

    Hi,

    There is no correct way and either way is acceptable. We are waiting to hear from ACCA as to which one they would like to see within the exam itself.

    Thanks

  • Author
    Posts
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