AC2101 S1 2014 Seminar 18 Revenue.pptx

1870k in sfp je2 progress billings dr account

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Unformatted text preview: Ø།  Current costs incurred for the year= $220k Ø།  Billings for the year = $600k Ø།  Collections for the year = $700k Ø།  Total costs incurred to date= $820k Ø།  Total profit on Project = $1m – $820k = $180k Ø།  PROFITABLE!!! 26 13 Repeat JE1 to JE4 for 20x4 •  JE1: Incurrence of costs Dr Construction- in- progress (CIP) $220k Cr Cash/payable/acc depreciation/etc. ($220k) •  JE2: Progress billings Dr Account receivable Cr Progress billings $600K ($600k) $700k ($700k) •  JE3: Cash collection Dr Cash Cr Account receivable 27 Repeat JE1 to JE4 for 20x4 (cont) •  JE4: Recognition of revenue & costs at end of period Dr Construction costs $220k Dr Construction- in- progress(CIP) $30k Cr Construction revenue ($250k) 28 14 At the completion of the project •  There are outstanding balances in the two statement of financial position accounts: •  Construction- in- progress •  Progress Billings §༊  JE5: Upon completion of project Dr Progress billings $1m Cr Construction in progress ($1m) All closed out 29 FRS 11 – Construction Contracts Recall - 3 possible scenarios: 1.  Where outcome can be reliably estimated & current estimates indicate an overall net profit on the project, revenue is recognized progressively based on the stage of completion 2.  Where outcome can be reliably estimated & current estimates indicate an overall net loss on the project, the entire loss is to be...
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This document was uploaded on 02/10/2014.

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