BU387 Lecture 13: BU387- W7, L1
Document Summary
If one of the ifrs criteria is met but the company cannot estimate, then the zero-profit method shall be used: use revenues as the number for costs, under aspe, completed-contract method used, measuring progress towards completion. Input measures (personnel used, costs): efforts devoted to a contract: disadvantages. ): track results: disadvantages, 8-floor building: 1st floor may require most work, not necessarily proportionate, 1/8th of the work, cost-to-cost method: three-step method, step 1: calculate percentage of total costs, incurred costs represent. Most recent estimate of total costs: step 2: revenue to be recognized to date. Percent complete * estimated total revenue (or gross profit: step 3: current period revenue. Revenue (or gross profit) recognized to date revenue recognized in prior periods. 4,500,000: differences in recording revenue between the two standards: Revenue recognized in 2018 (4,500,000 * & complete 1,125,000) U(cid:374)de(cid:396) a pe, of (cid:272)ou(cid:396)se, this loss (cid:449)ould(cid:374)"t (cid:271)e (cid:396)epo(cid:396)ted as the (cid:272)o(cid:374)t(cid:396)a(cid:272)t o(cid:448)e(cid:396)all (cid:449)ould still (cid:271)e profitable.
