Génie Civil Arvel is building a tunnel (price of 2,400,000, progress measured using costs). End of 20X1: costs incurred 500,000 out of total expected costs of 2,000,000, revenue recognised 600,000. End of 20X2: cumulative costs 1,500,000, total expected costs revised to 2,500,000 because the rock is harder than expected. The controller restates 20X1 (progress reduced to 20%, revenue 480,000) and recognises revenue of 960,000 in 20X2. Fact of the case: under IAS 8, the effect of a change in accounting estimate is recognised in the period of the change, without restating prior periods. Fact of the case: the provision for the onerous contract under IAS 37 is recognised separately and is not part of the question. What is the error?
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