On November 1, 2018, Green Valley Farm entered into a contract to buy a €150,000 harvester from John Deere. The contract required Green Valley Farm to pay €150,000 in advance on November 1, 2018. The harvester (cost of €110,000) was delivered on November 30, 2018. The journal entry to record the delivery of the equipment includes a debit to Unearned Sales Revenue for €

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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.