Lombardo Construction Corp. began work on a $100-million construction contract in 2014 to build a luxury hotel to be completed in 2016. During 2014, Lombardo incurred costs of $42 million, billed its customer for $38 million, and collected $35 million. In 2014, the construction industry also experienced significant expansion, rendering construction materials and labour more costly than originally estimated. At December 31, 2014, Lombardo has determined that it is difficult to estimate the costs to complete construction and therefore difficult to estimate the percent complete. Determine the amount of revenue that would be recognized in 2014 under current IFRS (IAS 11 and 18) and the zero-profit method. Lombardo believes it can recover at least the amount of costs incurred to date.
Answer to relevant QuestionsRancourt Corp. is a real estate company. Approximately 50% of sales are properties that Rancourt owns. In the remaining 50%, Rancourt brokers the transactions by finding buyers for property owned by other companies. Explain ...For each of the scenarios noted in BE6-4 above, when would revenue be recognized under the earnings approach? In BE6-4 (a) A manufacturer makes and sells farm equipment. The customer picks up the equipment upon purchase. In ...On April 1, 2014, Lisboa Limited entered into a cost-plus-fixed fee contract to manufacture an electric generator for Martinez Corporation. At the contract date, Lisboa estimated that it would take two years to complete the ...Instructions (a) Explain the principles and criteria for revenue recognition under the earnings approach. (b) For each scenario noted in E6-1, discuss when revenue should be recognized under the earnings approach. Provide ...Daisy Construction Ltd. has entered into a contract beginning January 1, 2014, to build a parking complex. It has estimated that the complex will cost $8 million and will take three years to construct. The complex will be ...
Post your question