Question
A company recognises revenue over time for a contract.
Costs incurred to date = ₹40,00,000; total estimated cost = ₹1,00,00,000; total contract price ₹1,40,00,000. Revenue recognised to date = ? (cost-to-cost method)Solution
Percentage of Completion = (Costs Incurred to Date / Total Estimated Costs) = 40,00,000 / 1,00,00,000 = 40%. Revenue to be Recognized = Total Contract Price × Percentage of Completion = 1,40,00,000 × 40% = ₹56,00,000.
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