A company entered into a contract on 1 January 20X5 to build a factory. The total contract revenue was $2.8 million. At 31 December 20X5 the contract was certified as 35% complete. Costs incurred during the year were $740,000 and costs to complete are estimated at $1.4 million. $700,000 has been billed to the customer but not yet paid. What amount will be recognised as a contract asset or liability in respect of this contract in the statement of financial position as at 31 December 20X5? A $271,000 contract asset B $509,000 contract asset C $271,000 contract liability D $509,000 contract liabilit
A company entered into a contract on 1 January 20X5 to build a factory. The total contract revenue was $2.8 million. At 31 December 20X5 the contract was certified as 35% complete. Costs incurred during the year were $740,000 and costs to complete are estimated at $1.4 million. $700,000 has been billed to the customer but not yet paid. What amount will be recognised as a contract asset or liability in respect of this contract in the statement of financial position as at 31 December 20X5? A $271,000 contract asset B $509,000 contract asset C $271,000 contract liability D $509,000 contract liabilit
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 40P
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A company entered into a contract on 1 January 20X5 to build a factory. The total contract revenue was
$2.8 million. At 31 December 20X5 the contract was certified as 35% complete. Costs incurred during
the year were $740,000 and costs to complete are estimated at $1.4 million. $700,000 has been billed
to the customer but not yet paid.
What amount will be recognised as a contract asset or liability in respect of this contract in the
financial position as at 31 December 20X5?
A $271,000 contract asset
B $509,000 contract asset
C $271,000 contract liability
D $509,000 contract liability
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