Question

(25 MARKS) Highland Construction entered into a contract to to Johor Bahru. The agreed contract price was RM4 million, the position of the contract at the end of the years 2015, 2016, and 2017: into a contract to construct an express highway from Melaka RM4 million, the following table shows the 2015 RM'000 2017 RM'000 Variation to the contract price (increase) Cumulative costs incurred to date Estimated costs yet to be incurred Progress billings to date 2016 RM'000 400 1,800 1,200 1.900 945 2,155 800 3,100 Nil 3,000 The company recognised profit based on cost incurred to total estimated cost. Required: a) Prepare extracts of the Statements of Profit or Loss for years 2015, 2016 and 2017. (15 marks) b) Prepare extracts of the Statements of Financial Position for years 2015, 2016 and 2017. (10

Answer 1

Extract of Statement of Profit and Loss:
Particulars	2,015	2,016	2,017
Sales for the current year	1,219,355	1,420,645	1,760,000
Less:
Cost incured in the current year	945,000	855,000	1,300,000
Profit (Only from this contract)	274,355	565,645	460,000
Working Note: Calculation of Cost and Sales to be recognised during the year:
Particulars	2,015	2,016	2,017
Cumulative Cost Incurred	945,000	1,800,000	3,100,000
Expected Future Cost to be Incurred	2,155,000	1,200,000	-
	3,100,000	3,000,000	3,100,000
Cost for the current year	945,000	855,000	1,300,000
Stage of Completion (Incurred/Total)	30.48%	60.00%	100.00%
Total value of Sale from this contract	4,000,000	4,400,000	4,400,000
Cumulative to be recognised as per stage of completion	1,219,355	2,640,000	4,400,000
Sales for the current year	1,219,355	1,420,645	1,760,000
Exract of Balance Sheet:
Assets	2,015	2,016	2,017
Gross amount due from customers for contract work
Sales recognised till date	1,219,355	2,640,000	4,400,000
Less: Progress Billing to date	800,000	1,900,000	3,000,000
	419,355	740,000	1,400,000

Final Check:

One way to cross check the answer is that the total of Profit = 1,300,000 is equal to Revenue (4,400,000) minus Cost (3,100,000)