Practice Activity 13.9 Accounting for a contract based on IFRS 15

Positive Change Limited entered into a contract with State Ministry of Roads, to carry out a construction contract for the construction of roads joining two rural communities. Due to the urgency to commence the road construction, Positive Change Limited was paid ₦563,000 as mobilisation fee for the construction of the roads.

Required:

i. How should Positive Change Limited account for the contract with the customer based on IFRS 15?

ii.How should Positive Change Limited treat the consideration received from Ministry of Roads?

See the suggested answers to practice activity 13.9.