Power Bhd is a company that specialise in building bridges, One of its major contracts is to
Question:
Power Bhd is a company that specialise in building bridges, One of its major contracts is to build a bridge over Sungai Padas in Sabah.
The agreed price contract was RM2,550 million. The contract work was scheduled to begin on 1 April 2015 and is expected to be completed on 30 September 2017.
For the purpose of this project, a plant costing RM96million was acquired. At the end of the contract, it was estimated that the plant will have a residual value of RM6million. Depreciation is charged on straight line basis.
Power Bhd accrues profit on the contract using the percentage of completion method measure by cost to date to total estimated cost.
In the year 2015, the following costs were recorded:
RM million | |
Architects and engineers fees | 30 |
Material delivered to site | 273 |
Direct labour costs | 270 |
Overhead (2/3) of direct labour cost, excluding depreciation | |
Estimated costs to complete (excluding depreciation) | 1,413 |
Material on site at year end for future work | 30 |
Progress billing to date | 750 |
Required:
1 Measure the stage of completion of the contract as at 31 December 2015
2. Prepare the extract of Statement of Profit or Loss for the year ended 31 December 2015
3. Prepare the extract of Statement of Financial Position as at 31 December 2015. (Show notes to the account).
Expert Answer:
To measure the stage of completion of the contract as at 31 December 2015 we need to calculate the percentage of completion based on the cost incurred ... View the full answer
