Revenue from Contracts

Hi, Where do you get the questions from? Why are you calculating WIP? You need to be calculating a contract asset under IFRS15. This is calculated as follows: Costs to date X Profits/(losses) to date X/(X) Amounts billed to date (X) Contract asset X Thanks

Thanks for replying, I follow the following guide : If the revenue recognised exceeds the cash received, there will be a contract asset. If the contract costs to date exceed the cost of sales recognised, this will be treated as work­in­progress. This can be included within the contract asset. This will be shown as a separate asset within current assets. The variants given are: Current assets Current liabilities A Contract asset/Inventory 6 Contract liability/Provision 6 B Contract asset/Trade receivables 8 Contract liability 20 C Contract asset/Inventory 6 Contract liability 20 D Contract asset/Trade receivables 8 Contract liability/Provision 6 Correct answer is D My calculations: Cash received 55 Cash recognized 63 Trade receivable 8 so Asset is 8 Revenue 63 COS 77 COS (provision) 6 Loss -20 so Liability is 6 However, variant A gives also Inventory =6 option and I calculate WIP as following: Cost to date 83 (77+6) Cost recognized 77 Inventory 6 Therefore, I could choose variant A. So, I just would like to understand, is my calculation of WIP wrong ? if it is right then variant A is potentially correct, isn't it?

Hi, You've already calculated the asset as being the 8, so I can't understand how/why you're then trying to calculate the inventory. Thanks