HS, a contractor, signed a two year fixed price contract on 31 March 2008 for $300 000 to build a bridge. Total costs were originally estimated at $240 000. At 31 March 2009, HS extracted the following figures from its financial records:
$000
Contract value....................................300
Costs incurred to date...........................170
Estimated costs to complete....................100
Progress payments received....................130
Value of work completed......................165
HS calculates the stage of completion of contracts using the value of work completed as a proportion of total contract value.
Required:
Calculate the following amounts for the contract that should be shown in HS's financial statements:
• Income statement:
- Revenue recognized for the year ended 31 March 2009.
- Profit recognized for the year ended 31 March 2009.
• Balance sheet:
- Gross amount due to/from the customer at 31 March 2009, stating whether it is an asset or liability.