Question
XYZ Ltd signs a contract on 30 June 2015, agreeing to build a bridge for ABC Limited at a contract price of $40 million. XYZ
XYZ Ltd signs a contract on 30 June 2015, agreeing to build a bridge for ABC Limited at a contract price of $40 million. XYZ Ltd estimates that construction costs will be as follows: ___________________________________________________ Year Ending Cost ___________________________________________________ 30 June 2016 $10 000 000 30 June 2017 $16 000 000 30 June 2018 $ 6 000 000 $32 000 000 The contract provides that ABC will make payments on 30 June of each year as follows: 2016 $8 000 000 2017 $20 000 000 2018 $12 000 000 $40 000 000 XYZ now estimates at the beginning of the 2017 financial year that construction costs will be as follows: _________________________________________________ Year Ending Cost ___________________________________________________ 30 June 2016 $10 000 000 30 June 2017 $21 000 000 30 June 2018 $15 000 000 $46 000 000 Required: Calculate: a calculate the income recognised each year
B) provide the journal entries for each year assuming extent of completion on the construction contract cannot be reliably estimated.
C) provide the journal entries for each year assuming extent of completion on the contruction contract can be reliably estimate
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started