Question
Entity A is a local contractor listed in Hong Kong for many years. It entered into a contract with the government on 1 January 2021
Entity A is a local contractor listed in Hong Kong for many years. It entered into a contract with the government on 1 January 2021 to build a cross-harbour tunnel.
The total contract revenue was $5,600,000. On 31 December 2021, the contract was certified as 35% complete. Costs incurred during the year were $1,480,000 and costs to complete are estimated at $2,800,000. The amount of $1,400,000 has been billed to the government but not yet paid.
REQUIRED:
Evaluate the amount of Contract Asset or Contract Liability that will be recognised in the Statement of Financial Position on 31 December 2021.
1. $542,000 Contract Asset
2. None of them.
3. $1,018,000 Contract Liability
4. $542,000 Contract Liability
5. $1,018,000 Contract Asset
Entity A is a local contractor listed in Hong Kong for many years. It entered into a contract with the government on 1 January 2021 to build a cross-harbour tunnel.
The total contract revenue was $5,600,000. On 31 December 2021, the contract was certified as 35% complete. Costs incurred during the year were $1,480,000 and costs to complete are estimated at $2,800,000. The amount of $1,400,000 has been billed to the government but not yet paid.
REQUIRED:
Evaluate the amount of Contract Asset or Contract Liability that will be recognised in the Statement of Financial Position on 31 December 2021.
| 1. | $542,000 Contract Asset | |
| 2. | None of them. | |
| 3. | $1,018,000 Contract Liability | |
| 4. | $542,000 Contract Liability | |
| 5. | $1,018,000 Contract Asset |
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Sound Investing, Chapter 1 - The Financial Pressure
Authors: Kate Mooney
2nd Edition
0071719237, 9780071719230
