15.6 Revenue recognition rendering of services

On 1 February 2023, FastNet Ltd entered into an agreement with Smith Ltd to develop a new database system (both hardware and software) for Smith Ltd. The agreement states that the total consideration to be paid for the system will be $430 000. FastNet Ltd expects that its total costs for the system will be $335 000. As the end of its reporting period, 30 June 2023, FastNet Ltd had incurred labour costs of $65 000 and materials costs of $180 000. Of the materials costs, $30 000 is in respect of materials that have not yet been used on the system. Of the labour costs, $12 500 is an advance payment to a subcontractor who had not performed their work on the project as at 30 June 2023. As at 30 June 2023, Smith Ltd had made progress payments to FastNet Ltd of $250 000.

FastNet Ltd calculates the measurement of progress using input methods in accordance with paragraph B18 of AASB 15/IFRS 15. Required Calculate the revenue to be recognised by FastNet Ltd for the year ended 30 June 2023 and prepare the journal entries to record the transactions described. Assume all of FastNet Ltds costs are paid for in cash.