Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sound Investing, Chapter 1 - The Financial Pressure

Authors: Kate Mooney

2nd Edition

0071719237, 9780071719230

More Books

Students also viewed these Accounting questions

Question

What, if any, limitations exist for arbitrators?

Answered: 1 week ago

Question

What are the disadvantages of arbitration?

Answered: 1 week ago