AC2101 S1 2014 Seminar 18 Revenue.pptx

# 75m 06m or 75 x 1m 08m 015m v revenue

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Unformatted text preview: s An account (in statement of ﬁnancial position) to record the amounts billed to the customers for work performed on a contract whether or not they have been paid by the customers (FRS11:41). 15 Cash Collection •  JE3: Cash collection Dr Cash \$300k Cr Account receivable (\$300k) In SFP In SFP 16 8 At the end of each reporting period, §༊  Step 1: Check the overall proﬁtability of the contract §༊  Step 2: Compute the percentage of completion §༊  Step 3: Compute the current construction proﬁt/(loss) for the current period §༊  Step 4: Compute the construction revenue earned for the current period §༊  Step 5: Compute the construction costs incurred for the current period 17 Scenario 1: Current estimates à༎ Overall Proﬁt Illustration 1 - Project A §༊  Contract price = \$1m; to be completed in 2 yrs §༊  At end of 20x3 Ø།  Current costs incurred to date= \$600k Ø།  Estimated additional costs- to- complete = \$200k Ø།  Total estimated costs = \$800 Ø།  Total Estimated proﬁt on Project = \$1m – (\$600k + \$200k) = \$200k Ø།  PROFITABLE!!! 18 9 Scenario 1: Current estimates à༎ Overall Proﬁt Illustration 1 - Project A §༊  Contract price = \$1m; to be completed in 2 yrs §༊  At end of 20x3 Ø།  % compl...
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