The Navirex shipyard is building a research vessel for an oceanographic institute. The contract is a single performance obligation satisfied over time; progress is measured using costs incurred. Agreed price: EUR 2,400,000; expected costs: EUR 1,800,000; costs incurred at 31 December 20X1: EUR 720,000. On 2 January 20X2, the institute approves the installation of an on-board laboratory integrated into the hull: the price increases by EUR 600,000 and expected costs by EUR 200,000. This work is not distinct from the vessel under construction. Compute the cumulative revenue after the modification and the cumulative catch-up adjustment (increase in revenue) recognised on 2 January 20X2.
- Original contract price
- 2,400,000
- Expected costs before the modification
- 1,800,000
- Costs incurred at 31 December 20X1
- 720,000
- Price increase for the laboratory
- 600,000
- Increase in expected costs
- 200,000