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 |
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