How would the accounting treatment differ

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Reference no: EM132937831

Question - STS plc is a construction contractor which prepares financial statements to 31 May each year. The following information relates to a contract with a customer which began during the year to 31 May 2021 and which was still in progress on that date:

£000

Contract price 600

Costs incurred to date:

- Till 31 May 2021 190

- To acquire materials for use in future work 30

Estimated further costs to completion 280

Invoiced customer thus far till 31 May 2021 175

Amounts received from customer 130

The contract is to be treated as a single performance obligation which is satisfied over time. The company measures the progress made on a contract by comparing the costs incurred for the work performed to date with the estimated total contract costs.

Required -

(a) Show how the contract should be reflected in the company's financial statements for the year to 31 May 2021.

(b) How would the accounting treatment differ if the contract price was £480,000 but all the figures remained the same?

Reference no: EM132937831

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