Entity A commenced a contract to build a non-current asset for Entity B in the year ended
Question:
Entity A commenced a contract to build a non-current asset for Entity B in the year ended 30 September 2018. The contract price was agreed at $1,500 and the total expected costs of the contract have been confirmed as $800. Entity A will satisfy the performance obligation over time.
The following figures were correctly recognised in the Statement of Profit or Loss for the year ended 30 September 2018:
- Revenue $450
- Cost of Sales $240
- Profit $210
The following figures are also relevant in relation to this contract:
- 2018 2019
- Costs incurred to date $325 $575
- Work certified to date $450 $1,050
Entity A recognises progress on a work certified basis.
REQUIRED:
Measure the contract revenue and contract cost for Entity A in its Statement of Profit or Loss for the year ended 30 September 2019.
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates