ACT 3124

Revenue from Construction Contract

Dr. Saidatunur Fauzi Saidin

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Example:
XYZ Sdn Bhd has two construction contracts outstanding at the end of its financial
year, 30 June 2019. Details are as follows: 截至 2019 年 6 月 30 日， XYZ Sdn Bhd
有两份未完成的建设合同。详情如下 :
 Description Contract A Contract B
RM’000 RM’000
Total contract price 25,000 20,000
Costs incurred to 14,000 15,000
date
Anticipated future 6,000 9,000
预期的未来 costs
Progress billings 12,000 10,000
Advance payments 4,000 Nil
% complete 60% 50%
30.6.2019
% complete 30% Not possible to
30.6.2018 determine
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In the year to 30 June 2018, XYZ Sdn Bhd recognized revenue of
RM7,000,000 and expense of RM5,500,000 on contract A. Contract B was at
an early stage of completion at 30 June 2018 but there was no indication at
that date that it was likely to make a loss. Expense incurred on contract B to
30 June 2018 totaled RM2,000,000.
  在截至 2018 年 6 月 30 日的一年里， XYZ Sdn Bhd 确认了合同 a 的收
入 700 万令吉和费用 550 万令吉。合同 B 在 2018 年 6 月 30 日处于完成
的早期阶段，但在那一天没有迹象表明它可能会出现亏损。截至 2018 年
6 月 30 日，合同 B 产生的费用总计 2,000,000 令吉。
Required:
(a) Compute the revenue and expense for each contract for the
year ended 30 June 2019.
(b) Prepare the extract of the statement of income FYE 30 June
2019.
(c) Prepare the extract of the statement of financial position as at
30 June 2019.
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The first step is to predict the overall contract result for both
contracts using the information available at the statement of
financial position date.
 Description Contract A Contract B
RM’000 RM’000
Total contract price 25,000 20,000
Total expected contract    
costs:
Costs to date (14,000) (15,000)
Expected future costs (6,000) (9,000)
Overall anticipated 5,000 (4,000)
result

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(a) Compute the revenue and expense for each contract for the
year ended 30 June 2019.
Revenue:
 Description Contract A Contract B
RM’000 RM’000
Cumulative revenue 15,000 10,000
to date (60%x25,000) (50%x20,000)
Less: recognized in (7,000) (2,000)*
previous years
Revenue for the 8,000 8,000
year

*The revenue recognized in the year to 30 June 2018 for contract B is equal to
the costs incurred in that year because the contract was at to early stage to
recognize any profit. The revenue and expense that is recognized is equal to
the costs incurred on that contract. 合同 B 在截至 2018 年 6 月 30 日的年度确认
收入等于该年度发生的成本，因为该合同处于确认任何利润的早期阶段。确认的
收入和费用等于该合同发生的成本。
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Expenses:
 Description Contract A Contract B
RM’000 RM’000
Cumulative 12,000 12,000
anticipated (60%x20,000) (50%x24,000)
expenses to date
Less: recognized in (5,500) (2,000)
previous years
Expense for the 6,500 10,000
year
Allowance for 0 2,000 (50% x
future losses 为将 4,000)
来的损失准备的准 6,500
12,000
备金
Expense for the
year
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(b) Prepare the extract of the statement of income FYE 30 June
2019.
Contract A Contract B Total
Revenue 8,000 8,000 16,000
Expense (6,500) (12,000) (18,500)
Net income 1,500 (4,000) (2,500)
(loss)

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(c) Prepare the extract of the statement of financial position as at
30 June 2019.

Current Assets:
Amounts due from customers 1,000,000 + 1,000,000 =
2,000,000

Or/and

Current liabilities:
Amounts due to customers 1,000,000

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Calculation:

  Contract A Contract B
RM’000 RM’000
Costs incurred to 14,000 15,000
date
Add: recognized 3,000* (4,000)*
profits / less
recognized loss*
Less: progress (12,000) (10,000)
billings (6,000)
Advance payments
Gross amounts due (1,000) 1,000
from customers

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*
Contract A Contract B
Cumulative Cumulative
RM’000 RM’000
Revenue 15,000 10,000
Expense (12,000) (14,000)
Net income (loss) 3,000* (4,000)*

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 THANK YOU
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