Question 1 (25 Marks) Al Aseel LLC has entered into an agreement to construct an office building in Five years. The client has agreed to pay Rials 65,000 at the end of fifth year when construction will be complete. The initial estimate of cost was Rials 40,000, however during the fourth year extra Rials 8,000 were spent and as a result the total cost became OMR 48,000. The estimated cost for five years is as below. Year Cost (OMR) 1. 12,000 2. 20,000 3. 29,000 4. 41,000 5. 48,000 The managing director wants to recognise revenue of Rials 65,000 in fifth year when the office building will handed over to the client. However the accountant who recently graduated with an accounting degree argues that this will be inconsistent with principle of IASs/IFRSs and has suggested the company should apply IFRS 15 Revenue recognition for treatment of this contract and spread the revenue over period of five years. Required: a. According to you whose point of view is correct for treatment of this contract, managing director or accountant? Justify your answer. (10 Marks) b. Show workings for recognition of profit/ (loss) for above contract for all five years if company uses percentage of completion method as per IFRS 15 and uses costs to calculate percentage of completion. (15 Marks)