Calculate the total revenue, Cost Accounting

Assignment Help:

Mandy Building Contractors Ltd signed a fixed-price contract to build a bridge for Nelly Ltd for $110 million on 1 July 2012.  Contract costs are estimated as follows:

Year ending 30 June

$

2013

25 000 000

2014

40 000 000

2015

35 000 000

TOTAL

100 000 000

 

Contract billings sent to Nelly Ltd each year are as follows:

Year ending 30 June

$

2013

20 000 000

2014

35 000 000

2015

55 000 000

TOTAL

110 000 000

 

Additional Information

(i)   Actual costs incurred each year coincide with expectations for each year.

(ii)  Cash collected each year from Nelly Ltd coincides with billings each year.

Required

(i) Assuming Mandy Building Contractors Ltd adopts the percentage-of-completion method (cost basis) in accordance with AASB 111 (outcome of the contract can be reliably estimated):

(a) Determine the percentage of completion for each of the three years and calculate the profit (loss) to be recognised for the year ending 30 June 2013 and 2014.

(b)      Calculate the total revenue to be brought to account for each of the three years.

(c)      Prepare the journal entry to record revenue only for the year ending 30 June 2014.

(ii)      Assuming the outcome of the contract cannot be reliably estimated:

(a)     How much profit (loss) (if any) should be brought to account for each of the three years?  Explain.

(b)     Determine the total revenue to be brought to account for each accounting period.  Explain.

(iii)     Assume that actual costs incurred for the year ending 30 June 2014 amounted to a total of $50 000 000 and that estimated costs for the year ending 30 June 2015 remained at a total of $35 000 000.  Determine how much profit (loss) is to be brought to account for the year ending 30 June 2014.  Explain your rationale.


Related Discussions:- Calculate the total revenue

What is the cost sheet, Cost sheet is a declaration of cost for a product f...

Cost sheet is a declaration of cost for a product for given period of time.

Estimate the required rate of return, a)     Company X is expected to maint...

a)     Company X is expected to maintain a constant 7% growth rate in their dividends, indefinitely. If the company has a dividend yield of 4%, what is the required return on their

Calculate the variable overhead, Questions 8-10 rely on the following data....

Questions 8-10 rely on the following data. FrontGrade Systems allocates manufacturing over- head based on machine hours. Each connector should require 11 machine hours. According t

Issues to consider when making decisions, Q. Issues to consider when making...

Q. Issues to consider when making decisions? At activity level A it can be seen from diagram that sales revenue line intersects the total cost line specifying that this is the

Standard cost, Standard Cost A predetermined cost is representing the i...

Standard Cost A predetermined cost is representing the ideal or norm achievable through an organization. Standard costs form the basis of a standard cost system used extensivel

Absorption costing and marginal costing, Absorption Costing and Marginal Co...

Absorption Costing and Marginal Costing Product costs are costs identified along with goods produced or purchased for resale. That costs are initially identified like part of

Analyzing direct material costs, You are reviewing a cost proposal, which i...

You are reviewing a cost proposal, which includes an $800,200 direct material estimate. After Initial examination of the proposal, you note that there are 500 material items, but y

Uniform costing, Uniform Costing It is a general system utilizing agre...

Uniform Costing It is a general system utilizing agreed concepts, standard and principles accounting practices adopted via different entities in the similar industry to ensure

Limitations of cvp analysis, Limitations of CVP Analysis The make use ...

Limitations of CVP Analysis The make use of the basic CVP model is just only relevant to planning and decision-making in an activity range whether the basic cost and revenue b

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd