a.Rattan commenced a contract to buildan asset for a customer in the yearended 30 September 20X4. Thecontract price was agreed at £1.5million, and the total expected costs ofthe contract are £800,000. Rattan willsatisfy the performance obligationsover time.The following figures are relevant inrelation to this contract for the yearended 30 September:b.C.Costs incurred todate.Work certified todate£320,000Question 10Select one:Rattan recognises progress on thebasis of work certified compared tocontract price.What should Rattan include in itsstatement of profit or loss for the yearended 30 September 20X5 for cost ofsales in respect of the contract inaccordance with IFRS 15 'Revenuefrom Contracts with Customers'?£560,000d.20X4 20X5£'000 £'000£250,000325 575450 1,050£240,000

The cost of each contract is computed individually and a different account is opened for each…

a. Rattan commenced a contract to build an asset for a customer in the year ended 30 September 20X4. The contract price was agreed at £1.5 million, and the total expected costs of the contract are £800,000. Rattan will satisfy the performance obligations over time. The following figures are relevant in relation to this contract for the year ended 30 September: C. Costs incurred to date Work certified to date b. £320,000 Rattan recognises progress on the basis of work certified compared to contract price. Question 10Select one: What should Rattan include in its statement of profit or loss for the year ended 30 September 20X5 for cost of sales in respect of the contract in accordance with IFRS 15 'Revenue from Contracts with Customers'? £560,000 d. 20X4 20X5 £'000 £'000 £250,000 325 575 450 1,050 £240,000

a. Rattan commenced a contract to build an asset for a customer in the year ended 30 September 20X4. The contract price was agreed at £1.5 million, and the total expected costs of the contract are £800,000. Rattan will satisfy the performance obligations over time. The following figures are relevant in relation to this contract for the year ended 30 September: C. Costs incurred to date Work certified to date b. £320,000 Rattan recognises progress on the basis of work certified compared to contract price. Question 10Select one: What should Rattan include in its statement of profit or loss for the year ended 30 September 20X5 for cost of sales in respect of the contract in accordance with IFRS 15 'Revenue from Contracts with Customers'? £560,000 d. 20X4 20X5 £'000 £'000 £250,000 325 575 450 1,050 £240,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

a.
Rattan commenced a contract to build
an asset for a customer in the year
ended 30 September 20X4. The
contract price was agreed at £1.5
million, and the total expected costs of
the contract are £800,000. Rattan will
satisfy the performance obligations
over time.
The following figures are relevant in
relation to this contract for the year
ended 30 September:
b.
C.
Costs incurred to
date.
Work certified to
date
£320,000
Question 10Select one:
Rattan recognises progress on the
basis of work certified compared to
contract price.
What should Rattan include in its
statement of profit or loss for the year
ended 30 September 20X5 for cost of
sales in respect of the contract in
accordance with IFRS 15 'Revenue
from Contracts with Customers'?
£560,000
d.
20X4 20X5
£'000 £'000
£250,000
325 575
450 1,050
£240,000

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