Bâtiroc is constructing an office building on its customer's land; the contract is a single performance obligation satisfied over time, with progress measured as costs incurred relative to total expected costs. Price: EUR 1,000,000; total expected costs: EUR 800,000. At the end of 20X1, costs incurred amount to EUR 400,000 and the revenue recognised reflects progress. Early in 20X2, the parties approve a change to the plans: price increased by EUR 200,000, expected costs increased by EUR 200,000. The remaining work is not distinct from the work already performed. Compute the cumulative catch-up adjustment (decrease in revenue) recognised at the modification date.
- Original contract price
- 1,000,000
- Total expected costs before the modification
- 800,000
- Costs incurred at the modification date
- 400,000
- Approved price increase
- 200,000
- Increase in expected costs
- 200,000