Starship plc specialises in the construction of retail shopping centres. This construction work is always based...
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Starship plc specialises in the construction of retail shopping centres. This construction work is always based upon detailed customer specifications, and usually involves a fixed-price construction contract extending beyond one year. At 31 December 2022, Starship plc has three fixed price construction contracts in progress, the salient details of which are as follows: Contract 3 Agreed contract start date Contract 1 1 July 2022 Contract 2 1 June 2022 1 November 2022 Agreed contract completion date 31 March 31 December 30 November 2024 2023 2024 £'000 £'000 £'000 Direct costs to date (incurred and paid) 3,760 4,180 3,380 Cost of work completed 3,560 3,941 591 Additional direct costs to completion 10,480 7,080 8,440 Fixed contract price 14,020 21,000 13,380 Progress payments (invoiced and 3,760 5,280 2,120 received) Additional Information Each contract is considered to contain one performance obligation that will be satisfied over time and the cost of work completed shown above has been certified by independent experts. Whilst Starship plc deems that an input method that uses the percentage of completion based on the cost of work completed as a proportion of total estimated costs appropriately predicts performance under each contract, it is believed that the outcome of each contract can only be estimated reliably once it has reached a minimum of 15% completion. A loss-making contract can be deemed onerous in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, with the loss reflecting the least net cost of exiting from the contract. Requirement Show how each of the three contracts will appear in the statement of profit or loss and other comprehensive income for the year ended 31 December 2022 and in the statement of financial position at that date in accordance with IFRS 15 Revenue from Contracts with Customers. Starship plc specialises in the construction of retail shopping centres. This construction work is always based upon detailed customer specifications, and usually involves a fixed-price construction contract extending beyond one year. At 31 December 2022, Starship plc has three fixed price construction contracts in progress, the salient details of which are as follows: Contract 3 Agreed contract start date Contract 1 1 July 2022 Contract 2 1 June 2022 1 November 2022 Agreed contract completion date 31 March 31 December 30 November 2024 2023 2024 £'000 £'000 £'000 Direct costs to date (incurred and paid) 3,760 4,180 3,380 Cost of work completed 3,560 3,941 591 Additional direct costs to completion 10,480 7,080 8,440 Fixed contract price 14,020 21,000 13,380 Progress payments (invoiced and 3,760 5,280 2,120 received) Additional Information Each contract is considered to contain one performance obligation that will be satisfied over time and the cost of work completed shown above has been certified by independent experts. Whilst Starship plc deems that an input method that uses the percentage of completion based on the cost of work completed as a proportion of total estimated costs appropriately predicts performance under each contract, it is believed that the outcome of each contract can only be estimated reliably once it has reached a minimum of 15% completion. A loss-making contract can be deemed onerous in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, with the loss reflecting the least net cost of exiting from the contract. Requirement Show how each of the three contracts will appear in the statement of profit or loss and other comprehensive income for the year ended 31 December 2022 and in the statement of financial position at that date in accordance with IFRS 15 Revenue from Contracts with Customers.
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Answer To account for the three construction contracts in accordance with IFRS 15 we need to follow ... View the full answer
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Understanding Cross Cultural Management
ISBN: 9781292015897
3rd Edition
Authors: Marie Joelle Browaeys, Roger Price
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