QUESTION 2 T Limited, is a publicly accountable construction company and its year-end is 31 December....

 

Transcribed Image Text:

QUESTION 2 T Limited, is a publicly accountable construction company and its year-end is 31 December. The company entered into a contract to construct a building for $1,650,000. At the end of 2014, the company initially estimated that the building would cost $1,210,000 but it has changed since. The details are as follows: Construction costs Estimated costs to complete Cumulative progress billings to date Cumulative cash collected $ 2014 405,000 805,000 380,000 350,000 2015 $ 468,000 477,000 900,000 770,000 $ 2016 577,000 1,650,000 1,650,000 Required: a) Prepare necessary journal entries for the years 2014 and 2015. b) Assuming the estimated cost to complete for the year 2015 was $830,000 instead of $477,000. Provide the journal entry for the revenue recognition only for the year 2015. c) If collection cannot be reasonably assured, explain how this transaction should be accounted for under a) IFRS/IAS 11 & 18 and b) ASPE. Make a recommendation QUESTION 2 T Limited, is a publicly accountable construction company and its year-end is 31 December. The company entered into a contract to construct a building for $1,650,000. At the end of 2014, the company initially estimated that the building would cost $1,210,000 but it has changed since. The details are as follows: Construction costs Estimated costs to complete Cumulative progress billings to date Cumulative cash collected $ 2014 405,000 805,000 380,000 350,000 2015 $ 468,000 477,000 900,000 770,000 $ 2016 577,000 1,650,000 1,650,000 Required: a) Prepare necessary journal entries for the years 2014 and 2015. b) Assuming the estimated cost to complete for the year 2015 was $830,000 instead of $477,000. Provide the journal entry for the revenue recognition only for the year 2015. c) If collection cannot be reasonably assured, explain how this transaction should be accounted for under a) IFRS/IAS 11 & 18 and b) ASPE. Make a recommendation

Answer rating: 100% (QA)

Questi... View the full answer