Section B Contracts Question

Question 1

Layout of income statement

Answer 1

Revenue
Cost of goods
Profit/loss
Adjustment for losses
Loss on contract for period

Question 2

SOFP layout

Answer 2

Cost incurred to date
Profits recognised on date
Losses recognised
Value of work performed
Deduct progress billings
Liability for expenses in excess of future billings

Question 3

Adjustment for losses calc

Answer 3

Total estimated cost - contract value + profit/loss