Lucea Pavers Limited is a construction company that specializes in the construction of roads and bridges....

 

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Lucea Pavers Limited is a construction company that specializes in the construction of roads and bridges. The financial year end of the company is the 31" of March each year. During the year ended 31 March 2020 the company commenced two construction contracts that are expected to take more than two years to complete. The position of each contract at 31 March 2021 is as follows: CONTRACTS Agreed Contract Price Cost incurred to date (at 31 March 2021) Cost to completion Agreed value of work completed at 31 March 2021 Progress billings invoiced at 31 March 2021 Cash received PORTLAND $000 12,000 5,640 3,760 2,200 500 450 TRIDENT $000 3,100 1737 2123 1680 1720 1200 The company uses the input approach to determine the percentage of completion for all contracts. The company considers that the outcome of a contract cannot be estimated reliably until a contract is 30% complete. It is, however, probable that the customer will pay for costs incurred so far. In relation to the Portland contract $2,000,000 in revenue and $1200,000 in cost was recognized in the year ended 31 March 2020. REQUIRED: a) Calculate the amounts which should appear in the income statement and statement of financial position of Lucca Pavers Limited at 31 March 2021 in respect of the above contracts. (18marks) b) According to IFRS15 how should revenue and cost be accounted for when the outcome of a contract cannot be reliably estimated? (4 marks) PART B Define the term Cash Generation Unit (CGU) and explain how it is used in the determination of the level of impairment that should be ascribed to certain assets. (7 marks) Lucea Pavers Limited is a construction company that specializes in the construction of roads and bridges. The financial year end of the company is the 31" of March each year. During the year ended 31 March 2020 the company commenced two construction contracts that are expected to take more than two years to complete. The position of each contract at 31 March 2021 is as follows: CONTRACTS Agreed Contract Price Cost incurred to date (at 31 March 2021) Cost to completion Agreed value of work completed at 31 March 2021 Progress billings invoiced at 31 March 2021 Cash received PORTLAND $000 12,000 5,640 3,760 2,200 500 450 TRIDENT $000 3,100 1737 2123 1680 1720 1200 The company uses the input approach to determine the percentage of completion for all contracts. The company considers that the outcome of a contract cannot be estimated reliably until a contract is 30% complete. It is, however, probable that the customer will pay for costs incurred so far. In relation to the Portland contract $2,000,000 in revenue and $1200,000 in cost was recognized in the year ended 31 March 2020. REQUIRED: a) Calculate the amounts which should appear in the income statement and statement of financial position of Lucca Pavers Limited at 31 March 2021 in respect of the above contracts. (18marks) b) According to IFRS15 how should revenue and cost be accounted for when the outcome of a contract cannot be reliably estimated? (4 marks) PART B Define the term Cash Generation Unit (CGU) and explain how it is used in the determination of the level of impairment that should be ascribed to certain assets. (7 marks)

Answer rating: 100% (QA)

a Income statement Revenue from construction contracts Portland contract 2000000 x 564012000 1040000 ... View the full answer