Concordia is a construction company. On 1 October 2015, Concordia entered a three-year fixed price contract to build a bridge for $30 million.

Further details of the contract are shown below: 

Concordia’s performance obligations are deemed to be satisfied over time in accordance with IFRS 15 Revenue from Contracts with Customers. The percentage of performance obligation complete is based on the value of work certified to date as a percentage of the contract price. 

Required

(a) Discuss how revenue and profit from the above contract should be recognised in accordance with IFRS 15 Revenue from Contracts with Customer

(b) Prepare extracts from Concordia’s statement of profit or loss and statement of financial position for the years ended 30 September 2016 and 2017.

Transcribed Image Text:

Years ended 30 September: Contract price Total costs incurred to date Expected further costs to complete Value of work certified to date Total progress billings to customer to date Total cash received from customer 2016 $000 30,000 5,000 18,000 7,500 6,000 5,300 2017 $000 30,000 12,000 8,000 24,000 21,000 18,500