On 1 July, 2016, a contractor signs a contract with a customer to build a power generating plant and a security house for ₦98,900.
The power generating plant is to be delivered on 30 November 2016.
The security house is to be completed on 31 October 2016.
The contract includes separate performance obligations. ₦88,900 is allocated to the power generating plant and ₦10,000 is allocated to the security house.
The reporting entity recognises revenue and its absolute right to the consideration after transferring the control of each promised good to the customer.
Required: Show the relevant entries required to reflect the contract progress.
See the suggested solution to practice activity 13.40 here.
Suggested solution to practice activity 13.40
31 October 2016:
The contractor transfers the security house to the customer.
Debit Credit
₦ ₦
Receivables 10,000
Revenue 10,000
30 November 2016:
The entity transfers the power generating plant to the customer.
Debit Credit
₦ ₦
Receivables 88,900
Revenue 88,900
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