Pocket Projects Ltd is a company specialising in the construction of schools for the Eastern Cape government. They were awarded a contract to construct a two‐storey building in Butterworth. A contract price of R12 800 000 was agreed upon and work commenced on 2 March 2021. It was expected that the building would be completed in two and a half years and that total costs would amount to R9 600 000. At year‐end 30 November 2021 actual costs incurred totalled R3 000 000, remaining costs were estimated at R6 600 000 and Pocket Projects Ltd had received billings to date of R4 480 000. The performance obligation will be satisfied over time and as such, Pocket Projects Ltd recognises revenue using the percentage of completion method based on time elapsed since the start of the project to the total expected time. If the balance for the above contract asset/contract liability for Pocket Projects Ltd on 30 November 2020 was R700 000, show how the entity would disclose these amounts in their financial statements for the year ending 30 November 2021. An appropriate note is required.
Pocket Projects Ltd is a company specialising in the construction of schools for the Eastern Cape government. They were awarded a contract to construct a two‐storey building in Butterworth. A contract price of R12 800 000 was agreed upon and work commenced on 2 March 2021. It was expected that the building would be completed in two and a half years and that total costs would amount to R9 600 000. At year‐end 30 November 2021 actual costs incurred totalled R3 000 000, remaining costs were estimated at R6 600 000 and Pocket Projects Ltd had received billings to date of R4 480 000. The performance obligation will be satisfied over time and as such, Pocket Projects Ltd recognises revenue using the percentage of completion method based on time elapsed since the start of the project to the total expected time.
If the balance for the above contract asset/contract liability for Pocket Projects Ltd on 30 November 2020 was R700 000, show how the entity would disclose these amounts in their financial statements for the year ending 30 November 2021. An appropriate note is required.
Step by step
Solved in 2 steps with 1 images
