FRA

gitimamishra01
Good Student
Posts: 13
Joined: Fri Dec 11, 2015 7:22 am

FRA

Postby gitimamishra01 » Fri Apr 29, 2016 4:50 pm

The question states profits at the end of the project.
The profits for each year may differ but won't they be same at the end i.e. $500,000
Kindly explain the answer
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edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Re: FRA

Postby edupristine » Wed May 25, 2016 11:23 am

Hi Gitima

Revenue Recognized= Percentage of Work Completed in the Period/Total Contract Value

Percentage of work completed is the proportion of work completed in a period to total work for the contract.

Percentage of Work Completed= Expenditures Incurred from Inception to Date/Total Estimated Costs for the Contract.
It is same at the end because the profit increase similarly ,
at the end the profit increase by (500,000/1500000)=33.33% at $2000,000 cost


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