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Question - Elliot Ltd signs a contract on 30 June 2020, agreeing to build a building for Erica Ltd at contract price of $210,000. Erica Ltd will have the control of the asset throughout the construction process. Elliot Ltd estimates the construction cost will be as follows:
Year ending
Cost
30 June 2021
50,000
30 June 2022
80,000
30 June 2023
20,000
Total
150,000
As the end of its reporting period 30 June 2021, Elliot Ltd had incurred labour costs of $20,000 and materials costs of $40,000. All materials and labour costs were used during the year. As at 30 June 2021, Erica had made progress payments to Elliot Ltd of $70,000.
Required - Calculate the revenue to be recognised by Elliot Ltd for the year ended 30 June 2021 and prepare the journal entries related to the revenue.
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