Reference no: EM132969090
Problem - ZZZ Corp. has a contract to construct a $5,000,000 cruise ship at an estimated total cost of $4,000,000. The company will begin the construction in 2011 and expects to complete it in 2014. ZZZ Corp. has never constructed a cruise ship before and the customer has never operated a cruise ship, so there are inherent future risks in this construction. The company has the following activity in 2011:
Costs to date: $980,000
Estimated costs to complete: 3,020,000
Progress billings during the year: 1,000,000
Cash collected during the year: 648,000
Required -
1. Under IFRS, how much revenue should Swallow Corp. recognize on its 2011 income statement?
2. Under IFRS, how much of construction in progress is reported on its 2011 balance sheet?
3. Under IFRS, how much of accounts receivable is reported on its 2011 balance sheet?
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