Hautvallon is renovating a customer's factory for a price of 2,400,000; the obligation is satisfied over time and progress is measured by costs incurred (documented choice). Total expected costs amount to 2,000,000, of which 800,000 for a cooling unit bought from a supplier, without significant involvement of Hautvallon in its design or manufacture. The customer obtains control of the unit as soon as it is delivered to the site in 20X1, well before its installation; the unit is not distinct, and its cost is significant relative to the total (case data). Hautvallon has concluded that recognising revenue equal to the cost of the unit best depicts its performance (judgement, case datum). At 31 December 20X1, in addition to the delivered unit, Hautvallon has incurred 300,000 of other costs. Compute the percentage of completion of the other work and the revenue recognised for the unit.
- Contract price
- 2,400,000
- Total expected costs
- 2,000,000
- Cost of the cooling unit
- 800,000
- Other costs incurred at 31 December 20X1
- 300,000