Contruction contract: Initial revenue estimate Rs.100/-; Cost estimate - Rs.50/-
In year I, Cost was Rs.20/- hence revenue recognised was Rs.40/-
In Year II, Cost was Rs.10/- (cumulative Rs.30/-), hence revenue recognised was Rs.20/- (Cumulative Rs.60/-)
In Year III, cost incurred was Rs.45/- (Cumulative Rs.75/-) with cost estimate going up to Rs.125/-;
In Year IV, cost incurred was Rs.50/- (Cumulative Rs.125/-).
In Year III & IV what accounting treatment needs to be followed?
CAclubindia
