- 7/2/2025
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CreativityTranscript
00:00As no.7 Construction Contract is going to be discussed in this class.
00:16Construction Contract Construction Construction Contract is about to now be
00:21So, we will deal with that.
00:51Now, compute the percentage completion and contract revenue and cost to be recognized
00:59from the following data.
01:01Contract price 150 lakhs, you keep it aside.
01:06Materials issued to contracts 36 lakhs which materials costing 6 of which materials costing
01:146 lakhs is still lying unused at the end of the period.
01:17So, material because of the sale, you have to deal with material.
01:2336 lakhs, closing stock unused at the end of the period, we will spend 30 lakhs.
01:28So, 30 lakhs is spent.
01:31Labor cost 24 lakhs, that is 4 lakhs still unpayable.
01:35Outstanding to you, what do you want to do?
01:37Add to you.
01:38So, 24 plus outstanding 4 add to you.
01:41Labor because we will sell 28 lakhs.
01:46In the contract, specific for this, specific cost is the value being 12 lakhs.
01:57Subcontract cost for work executed.
02:04Subcontract.
02:05Subcontract cost.
02:061 lakhs.
02:07Subcontract cost.
02:08Subcontract cost.
02:09Subcontract cost.
02:101 case of return, first.
02:11Theravinday cost cost is pure.
02:12That costs 10 lakhs cost just a vehicle.
02:14The cost of 10 lakhs and also a high foundation SALT of our project cost.
02:17Advanced paid to contractors.
02:18Subcontractors have been a advanceR lecture which includes $10 lakhs.
02:21Organizer deserves to give the plannings
02:24for this and pay for將x.
02:26We never mind that.
02:28왜 you pay its start, we have not ready to pay the contract.
02:31Cost estimated to be incurred to complete the contract,
02:34The contract has been completed.
02:35the size of an account that will be 60.
02:37after.
02:39after.
02:40the fourth ad is
02:4130, 28, 12, 10.
02:47after 80 lakhs.
02:49the 80 lakhs is cost to date.
02:53during the time, the last name of an account is cost to date.
02:57and if the project has been completed,
02:5860 lakhs, add further cost for completion, further cost for completion, which is 60.
03:07That is what about the total cost, total contract cost, total cost.
03:16What is the percentage of completion?
03:18Okay, so question number one, contract cost, material cost, labor cost, in the contractor
03:29specific cost, subcontractor, we will make the cost date of 80 lakhs, we will make the cost
03:35of completion, further cost to completion, we will make the total cost, percentage of
03:43completion, percentage of completion, cost of completion, cost of completion, cost of
03:47cost to date divided by total cost, in this case, we will make the end of the lecture
03:52service, we will make the end of the lecture, we will make the end of the lecture, we will
03:55make the end of the lecture, total 140 lakhs, 1050, 80 by 140, so roughly 57.14% complete
04:11Amend from this class with the tablespoon, we的話ud one, reached the year起來, our
04:19הבא,ена lorando cost between 14.15 JUST, 480,000,001, 1,304,000,001,100,000,002,500,001,000,002,000,000,002,000,وم% come to each offer, that's
04:23the main order, this standard, startingaltار, tier as terms are 0,300,000,002,500,002,000,002,000,002,000,002,am to each time we need the cost of the
04:37So, 150 lakhs into the percentage of completion under 57.14 percentage. 57.14 percentage
04:46as it is now 85.71 lakhs. Less. We have spent 80 lakhs can be subtracted. So, 5.71 lakhs
05:04is the profit identifiable and transferable to the PN. This is the modern approach.
05:10This is as per AS number 7. AS number 7. We have to go with that.
05:20Anyhow costing in the model follow up and enter ground. Hereafter. Okay.
05:30That was contract price on the 50 lakhs. I put all the values in thousands of 5000 rupees.
05:39First year end of the year, $800 is the same. Estimated cost to be incurred on the $2,200.
05:49Progress payment. If you have a contract, you will receive the progress payment. We never mind about that.
05:56Total cost to date on the $800. Further cost to $2,200 say no.
06:00Now, after the project we have completed, we have to plan the $300. So, $800, $2,200 and then $2,300 is $3,000.
06:10So, $3,000 is the cost to date on the $800. So, $3,000 is the cost to date on the total cost of $26.67.
06:20Total cost of $26.67. Revenue, we have to recognize that contract price multiplied with the percentage of completion.
06:31Contract price is $5,000. As it is now $26.67. Completion is the cost of $133.33 is the revenue.
06:38So, the cost incurred up to the second year rate is $2,100. So, the cost incurred up to the second year rate is $2,100.
06:52And the project completed last year, $4,400 is the cost for completion $1,400. So, $1,400 is the cost for completion $1,400.
07:07profit reduces. Okay, whatever it may be, if a percentage of completion on the idealogical
07:17approach cost to date and total cost to cooler relationship, the percentage of completion
07:24here being 60 percentage, right? 2,100 divided by 3,500, put it in, how percentage is it?
07:3260 percentage, am I right? So, it is 60 percentage, 60 percentage
07:40varudu, revenue varam poodhu, contract price into percentage of completion
07:45poodrono, so percentage of completion 60 percentage inna, 5,000 is 60 percentage
07:48pootting na, the value being 3,000 rupees, cost to date onthi, inni kukurikki
07:54ratayethi nurema selho pannye irukkuraam na, evalho profit identify pannikkalaam
07:57idu profit to date, in the 900 ll profit up to the previous year, profit up to previous
08:07year varakki me eval eurundarukkabhichu nakka, first case inna illa, second year
08:11second year varam poodhu, pōrono vandshami, 5,000, 43,000, 45,000 byisna nam
08:15identify panniittwo, adhu subtract pannetiittiing na, balance being balance being, how much
08:21is that? 366.67 is the current year profit amadai, this is what about the current year profit?
08:29In the first year, the first year is the current year's profit.
08:34Next year, we have 900 rupees profit.
08:37That is, the previous year is the current year's profit.
08:41Now, we move on to the third year.
08:44Third year, we go to the third year.
08:46Our percentage of cost to date,
08:49we have completed the second year.
08:51So, we have spent around 3,000 rupees in third year.
08:57And third year, we have completed the second year.
09:01So, that 800 rupees will be addable with that.
09:05If we add the total cost is 3,800.
09:09And the percentage of completion is the third year.
09:15The percentage of completion in the third year being 78.95%.
09:19So, 78.95%.
09:23If you identify the revenue,
09:25the contract price multiplied with the percentage of completion.
09:28That is, 5,000 or 78.95%.
09:31That value being?
09:334,000?
09:343,947.
09:353,947.
09:363,947.
09:37Okay.
09:383,947.
09:39Okay.
09:40So, 3,947.5 or 48.
09:42So, 3,948.
09:43So, 3,948.
09:44If you compare the cost,
09:473,000 is the cost.
09:48Subtract the profit up to the date is 948.
09:51Profit up to the previous year.
09:52Profit up to the previous year,
09:53we will recognize the price of 900 rupees.
09:55Third year, your profit restricted to only 48 rupees.
09:57Is that okay?
09:58Now, I am moving to the last year.
09:59Fourth year.
10:00Fourth year.
10:01That date being 4,200,
10:02there is no further completion cost.
10:04Is that okay?
10:05Now, I am moving to the last year.
10:06Fourth year.
10:07Fourth year.
10:08The project completed.
10:09In your cost date that,
10:10that date being 4,200,
10:12there is no further completion cost.
10:14That is okay?
10:15Is that okay?
10:16Now, I am moving to the last year.
10:17Fourth year.
10:18The project completed.
10:19I am moving to the last year.
10:20I am moving to the last year.
10:21At the last year,
10:22the project completed.
10:23In your cost date that,
10:24that date being 4,200,
10:25there is no further completion cost.
10:26That is complete.
10:27Is that okay?
10:29Now, if you are doing the last year,
10:31what you are doing is 100% completion stage.
10:34You have to get 5,000,
10:36you have to get 5,000.
10:37The revenue is 5,000.
10:39The contract price is the first revenue.
10:41The cost date is 4,200,
10:43and 800 rupees is your profit.
10:45The profit earned up to the previous year,
10:48on the 948.
10:49So, last year,
10:50you lost 148 rupees.
10:52This will be divided to the PNL account.
10:54These values are going to be
10:56credited to the PNL account year on year.
10:59But in the last year,
11:00you lost by 148 rupees to be
11:02charged to the PNL account.
11:04If you are doing the contract
11:06following,
11:07yes number 7.
11:09We are doing this.
11:10Anyhow,
11:11we are doing this.
11:12It is costing.
11:13Now,
11:14the percentage of completion
11:15revenue is recognized.
11:16Newport Construction Limited.
11:22Obtained a contract for construction of flyover.
11:29Following information is available for the year and death.
11:3231st March 2015.
11:34Total contract price is 500.
11:37Total contract price is 500.
11:39In this case,
11:41work certified is 300.
11:42Work not certified is 50.
11:44In this case,
11:45we are going to show you the model.
11:46Latest model,
11:48what do we do?
11:49Cost date,
11:50further cost for completion,
11:52based on estimation,
11:53total cost.
11:54Estimated further cost.
11:55Estimated further cost for completion,
11:57390.
11:58Estimated further cost for completion,
12:00390.
12:01Estimated further cost for completion,
12:03390.
12:04Now,
12:05we will assume,
12:06the cost to date may be,
12:11cost to date may be,
12:12these two will be the cost to date in which you come.
12:15As the cost to date information is not given,
12:18so work certification,
12:19as well as work not certification,
12:21ready-made cost to date.
12:22Actually,
12:24this number is also available.
12:25Work certification is cost to date.
12:27But,
12:28anyway,
12:29it is not available.
12:30Work certification is cost to date.
12:32So,
12:33300 plus 50,
12:34350 is the cost to date.
12:35And the project completed,
12:36is the cost to date.
12:37And the project completed,
12:38is about 190 rupees.
12:39So,
12:40the first time,
12:41we are going to be 540.
12:43So,
12:44percentage of completion,
12:45if you look at revenue,
12:46if you look at revenue,
12:47if you look at revenue,
12:48percentage of completion,
12:52cost to date,
12:53540.
12:56Sorry,
12:57cost to date,
12:58350.
13:01Further cost for completion,
13:03190.
13:05Total cost being 550.
13:10And,
13:11percentage of completion,
13:15percentage of completion,
13:17350 divided by 540,
13:20how many percentage are?
13:2164.81 percentage.
13:22Is that okay?
13:2364.81 percentage.
13:24Is that okay?
13:2564.81 percentage.
13:26Contract revenue,
13:27Find it.
13:28Find it.
13:29You can apply it.
13:30But,
13:31apply it.
13:32You can apply it.
13:33You can apply it.
13:34Total cost is 540.
13:35Contract price is 540.
13:36Find it.
13:37You can apply it.
13:38You can apply it.
13:39You can apply it.
13:40You can apply it.
13:41Total cost is 540.
13:42Contract price is 500.
13:43Compare it.
13:44You can compare it.
13:45Cut time.
13:46We know loss.
13:47But,
13:48Loss is a percentage of completion,
13:49percentage of completion,
13:50total loss.
13:51Total loss.
13:52You can recognize it.
13:53Total revenue.
13:54Is that right?
13:55Is that right?
13:56How many?
13:57Fifty?
13:58One.
13:59$500.
14:00To,
14:01the cost of completion is 64.81 percentage.
14:02What percentage is?
14:03Three.
14:04Twenty.
14:05Twenty.
14:06Twenty.
14:07Twenty.
14:08Twenty.
14:09Twenty.
14:10Twenty.
14:11Twenty.
14:12Twenty.
14:13Twenty.
14:14Twenty.
14:15Twenty.
14:16Twenty.
14:17Twenty.
14:18Twenty.
14:19Twenty.
14:20Twenty.
14:21Twenty.
14:22Twenty.
14:23contract revenue guarantee of 40 rupees loss oru na you have to make a provision of this today
14:29itself sir 65 tha nae vandirik kapa 65 percent eadthakla ma na no in case of loss you have to
14:35recognize 100 percent is that okay come on finish up construction contract na enna
14:44directly related to construction of asset and demolition of asset asset
14:51a demolish pandhra thum contract la tham pa varudhu it is not only construction it is demolition also
14:56mind that these are the two points will be covered under this this particular ace is applicable for
15:03the contractors not for the contractee contractee ki iri kadeh adhu contract rukh tham contract
15:10epi irukkla na fixed price contract irukhum cost plus irukhum mixed irukhum that you might have
15:15studied already in the contract costing itself fixed price na contract price voru 100 lakhs
15:2125 lakhs na fix ppantanga na adhu ppareh fixed price eowlo selao avadha pannitteva aangga
15:26and the selao avadha nang eowlo avadha pannitra inglo adhu lala na aur engineer a vandhu
15:29kandhu pannhi kudukkera ena kogru 5 percent kuttu nang ennuday commission apri
15:32chudna akka adhu pereh cost plus rentimates eowindhu kuda arukkum adhu pereh mixed contract
15:39method of determining profits laura pordhu arukkum we depend on percentage of completion method
15:45method predominantly recognized by eas no.7 but we have the completed contract method
15:51method of course recognize but usually it is not recommended under section under eas no.7
15:58is that okay it was a one that was said
16:02in this contract revenue in this issue we have some way to find the concepts we have the
16:07theory is not clear
16:10we know that percentage of completion episode cost to cost method
16:16That is cost to date divided by total cost method calculate that is the illustration method.
16:21That is not the survey method, physical proportion method also we have.
16:25That is when we have 10 room cut.
16:29This is 4 room cut.
16:31That is 40% over.
16:33That is the physical proportion method.
16:36Survey method is experts who have certified.
16:41That is the survey method.
16:44Anyhow, we are predominantly maintain, manage only the cost to cost method.
16:49In case of expected loss,
16:52and the loss and what you have done,
16:54Probable that cost is more than revenue.
16:56Create provision irrespective of the work performed and percentage of completion.
17:00Percentage of completion,
17:02if you have the first expected loss,
17:05you will create provisions.
17:07That is the provisions.
17:09With that age number 7 is over.
17:12Now, age number 9 is over.
17:15Now, age number 9 is over.
17:17There is no any more illustrations like.
17:20Right?
17:21Revenue recognition,
17:23okay,
17:24what that is over,
17:26and how can we now tell.
17:28It appears to be in the房,
17:29undefined enough,
17:30which we have not been getting here.
17:32That is the answer right now.
17:33Yes number 9.
17:34Okay.
17:35Revenue,
17:36gross inflow of cash,
17:37receivable or other consideration
17:39in the ordinary business.
17:41Ordinary business and there have been there.
17:42�
18:01is rendering of services.
18:03AS number 9 applicable is AS number 7 contract, AS number 12 government grants, AS number
18:0919.
18:10So, it is EPS and AS number 19 on the leasing.
18:21Insurance and gain on sale of assets, AS number 9 will not be working, this will not be applicable.
18:29Sale of goods is available, if you handle the sale of goods, if you handle the sale of goods,
18:39the seller is available, the goods is available, the ownership is available, the significant risk and reward is available,
18:49the reward and control is available, the amount is available and the condition is satisfied.
18:56So, the sale is available in that moment, we recognize it.
19:01Ownership is transferred, significant risk, reward and control associated with that also is transferred.
19:07That's well.
19:08And, that's why I have a consideration.
19:10Fan form is one of those who said that, this is the sale of goods.
19:14Rendering of services is either completed contract method or proportionate completion method.
19:21So, AS number 7 is here.
19:22So, AS number 7 is here.
19:23That's a method.
19:24It's not complete.
19:25It's not complete.
19:26It's not complete.
19:27It's a method.
19:28AS number 7 is a contract.
19:30It's a contract.
19:31Okay.
19:32Okay.
19:33So, that's why I was given a contract, and here is a contract.
19:34Until the contract,
19:36one을 긁回去 Mondi,
19:40so that you'dopa recognize it.
19:41Then you'd like to confirm it.
19:42On this track,
19:59The sale of goods is the revenue recognition of rendering of service.
20:03In the sale of goods, there are some special cases that we can look at.
20:07There are three aspects. Goods, so three aspects are goods,
20:12in one of the services, in one of the enterprise resources.
20:15That will come under this case.
20:26If you invest in bank, share, dividend, and share,
20:34all of the technical know-how to say, that is royalty.
20:38These three wishes are the enterprise resources.
20:42That is the use of interest to generate.
20:45If you are interested in the time basis, you will confirm that you will do the time basis.
20:51You will do the time basis.
20:53So, in the time basis, you will recover from the time basis.
20:57Dividend, if you come, you will declare and recognize.
21:01Royalty, any agreement on the basis?
21:04Revenue recognition, goods, services, and enterprise resources.
21:09Enterprise resources, interest, dividend, royalty.
21:11In the three weeks, we will look at.
21:13Now, goods is okay.
21:15But there are some special cases.
21:17There are some special cases.
21:19There are some special cases.
21:21There are some special cases.
21:23So, installation and inspection,
21:25that's the same thing.
21:26There is a new agency and the agency goods.
21:27You can do it for any recognition.
21:29You can do it for a reason.
21:31You can do it for sale,
21:32and you can do it for a reason.
21:33You can do it for a reason.
21:35If you are satisfied that you are working.
21:37You can do it for a reason.
21:38It is working, then you can do it for one million bucks.
21:39So, recognition of revenue is on the installation and acceptance of the buyer.
21:43The sale will be recognized only on the acceptance or approval by the seller.
21:58The seller means buyer approve and you will recognize it.
22:03The sale will be recognized by the seller.
22:19The sale will be recognized by the seller.
22:25Or there will be agreed with the seller.
22:33Now you can speak the seller.
22:45warranty sale.
22:49You can choose the extent of provisionals.
22:51You can order at least 100 units.
22:55You cannot recognize the cost in the 6 months.
23:01You cannot repair.
23:07You cannot regain the cost.
23:14In the consignment case, A is going to sell B, and B is going to sell the consumer.
23:20A is going to sell the sales.
23:23B is going to sell the consumer.
23:26On delivery to the buyer.
23:28Special order.
23:29A is going to sell the product.
23:32A is going to sell the box.
23:36I am ready to sell the box.
23:39The box is ready to sell the sales.
23:45This is suitable only for A.
23:48Who is going to sell the income?
23:53Identification is kept ready for delivery.
23:56Delivery is ready to sell the product.
23:59The subscription of publications.
24:03Annual subscription, lifetime subscription.
24:07The selection of $ cups gets used in $3.
24:19Value Disproportionate of $5.
24:25In December, Windows and December.
24:29special edition.
24:30If you say that you have 50 of them, which are 10 rupees, you did not say that.
24:33If you say that you have 50 rupees, you have 10 rupees.
24:36You have 10 rupees, you have 50 rupees, you have 100 rupees.
24:39So, if you say that you have 200 rupees, what amount of this?
24:43January, February, March.
24:46This year, we start with April and end the 31st of next year.
24:52This sale period is January.
24:57January 10, February 10, March 10 and February 10.
25:04OK, this amount of recognition is shown here.
25:09It is equal proportionate.
25:12Installments sales are there.
25:15Installments are there.
25:17Installments are there.
25:19Cash price are there.
25:22But when we get the delay, we get the interest in time-based, we recognize that these are the special things we have to know in the goods case.
25:32If we get the services, we get the installation and inspection, on installation and acceptance.
25:42Sir, here are the same the same. This is AC, and it is AC installation.
25:49Then, the AC is the platform, the AC is the installation.
25:54The AC is the platform.
26:03So, if you want to install it, you can install it.
26:33So, the amount, this is called goods o'day recognition, this is called service o'day recognition. So, this will come under this second block, this will come under the first block. Should not have any confusions.
26:48If you are a member of that, in the newspaper, you will publish and in the newspaper, you will recognize the agent. If you are an insurance agency comments, you will recognize the financial services.
27:04you can share shares or mutual funds or FTE or FTE but if you have a commission, as the case may be,
27:12what provision is based on that provision. Admission fee, if you have an event, IPL match,
27:19if you have an entry fee, if you have a round entry fee, IPL will recognize that on conducting the event.
27:29tuition fees, it will be spread over the 1 years period. If you have an entry fee,
27:39if you have an entry fee, it should be usually capitalized or any association in your regular membership fees,
27:46that will be over the period of time, can be amortized.
27:49If you have an entry fee, if you have an entry fee, you will see a membership fee and subscription fee fee,
27:55then the 1.5th fee could be recognized in your PID. That's what about service case.
28:00And if you recognize all the points that you have to know,
28:03subsequent uncertainty in collection will be found. Certainty of collection can be found.
28:10I hope I couldn't understand.
28:14So with that, AS is over.
Recommended
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