Question 2 25 Marks Ovitoto Concrete Investment Cc presented you with the follow

Question

Question 2 25 Marks Ovitoto Concrete Investment Cc presented you with the following information for the contracts awarded in Sept 2017; Contract Okahandja Road Midgard Road Contract Price 1 499 500 1 950 550 Work certified 1 249 500 1 550 550 Cost of work certified 1 199 500 1 400 550 Cost of uncertified work 999 500 1 210 550 Cash received 1 149 500 1 400 550 Total expected cost (including costs incurred) 1 299 500 1 850 550 The percentage of completion method (based on costs) is used to calculate profit on contracts, but only once contracts are 30% or completed or more. REQUIRED:

Calculate the profit/loss that can be brought into account for the financial period under review for each of the contracts in the records of Ovitoto Concrete Investment Cc. (19)

Explanation / Answer

Okahandja Road Midgard Road Total expected cost(incl.cost incurred) 1299500 1850550 Work certified 1249500 1550550 % of completion(Work certified/Total costs) 96% 84% So, revenue to be recognised 1.Contract Price 1499500 1950550 2.% of completion as above 96% 84% 3.Revenue to be recognised(1*2) 1439520 1872528 4. Less : Cost of work certified 1249500 1550550 So,Profit to be recognised 190020 321978

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