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The percentage of completion of this contract at the year-end is
a. 50% (= 6.0/18.0)
b. 27% (= 4.5/16.5)
c. 25% (= 4.5/18.0)
d. 39% (= 7.0/18)
4. A construction company is in the middle of a two-year construction contract when it receives a letter from the customer extending the contract by a year and
requiring the construction company to increase its output in proportion of the number of years of the new contract to the previous contract period. This is allowed in
recognizing additional revenue according to IAS 11 if
a. Negotiations have reached an advanced stage and it is probable that the customer will accept the claim.
b. The contract is sufficiently advanced and it is probable that the specified performance standards will be exceeded or met.
c. It is probable that the customer will approve the variation and the amount of revenue arising from the variation, and the amount of revenue can be reliably
measured.
d. It is probable that the customer will approve the variation and the amount of revenue arising from the variation, whether the amount of revenue can be reliably
measured or not.
5. A construction company signed a contract to build a theater over a period of two years, and with this contract also signed a maintenance contract for five years. Both
the contracts are negotiated as a single package and are closely interrelated to each other. The two contracts should be
a. Combined and treated as a single contract.
b. Segmented and considered two separate contracts.
c. Recognized under the completed-contract method.
d. Treated differently—the building contract under the completed-contract method and maintenance contract under the percentage-of-completion method.