Exercise 15.7Revenue recognition rendering of servicesOn 1 February 2017, MacroDot Ltd entered into an agreement with Customer S to developa new database system (both hardware and software) for Customer S. The agreement statesthat the total consideration to be paid for the system will be $860 000. MacroDot Ltdexpects that its total costs for the system will be $670 000. As the end of its reporting period,30 June 2017, MacroDot Ltd had incurred labour costs of $130 000 and materials costs of$360 000. Of the materials costs, $60 000 is in respect of materials that have not yet beenused on the system. Of the labour costs, $25 000 is an advance payment to a subcontractorwho had not performed their work on the project as at 30 June 2017. As at 30 June 2017,Customer S had made progress payments to MacroDot Ltd of $500 000.MacroDot Ltd has determined that AASB 111/IAS 11 does not apply to this transaction andcalculates the percentage of completion using paragraph 24(c) of AASB 118/IAS 18

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Calculate the revenue to be recognised by MacroDot Ltd for the year ended 30 June 2017and prepare the journal entries to record the transactions described. Assume all ofMacroDot Ltds costs are paid for in cash.

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