Entity A is a construction company listed in Hong Kong. To maintain consistency, it always recognises progress based on work certified over total contract value. For a long-term contract, Entity A will satisfy the performance obligation over time. In the year to 30 June 2020, Entity A had recognised revenue of $15,000,000 and a profit of $3,750,000 in respect of this contract. The following information relates to one of its long-term contracts on 30 June 2021. Contract price = $50,000,000 Costs incurred to date = $32,500,000 Estimated cost to complete = $5,200,000 Invoiced to customer = $30,000,000 Work certified to date = $42,500,000 The end of the reporting period is 30 June.

Entity A is a construction company listed in Hong Kong. To maintain consistency, it always recognises progress based on work certified over total contract value. For a long-term contract, Entity A will satisfy the performance obligation over time. In the year to 30 June 2020, Entity A had recognised revenue of $15,000,000 and a profit of $3,750,000 in respect of this contract. The following information relates to one of its long-term contracts on 30 June 2021. Contract price = $50,000,000 Costs incurred to date = $32,500,000 Estimated cost to complete = $5,200,000 Invoiced to customer = $30,000,000 Work certified to date = $42,500,000 The end of the reporting period is 30 June.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 10C

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