CERTYNEX IFRS ACADEMY

For a renovation contract of Atelier Corbel (price of 1,500,000, obligation satisfied over time, progress measured using costs), an accounting assistant prepared the following at 31 December 20X2: cumulative costs 900,000; total expected costs 1,200,000; progress 75%; cumulative revenue 1,125,000; revenue recognised in 20X2: 1,125,000. Revenue for 20X1 was 450,000. Where is the error?

The 75% progress is wrong, because costs should have been compared with the price of 1,500,000.

Cumulative revenue is wrong: it should have been calculated by applying 75% to total expected costs.

Revenue for 20X2 is 675,000: the cumulative amount was recognised instead of the change.

The cost method is not permitted for a renovation; an output method was required.