A3- 2.

 (1)  The company provide design service for Marie over the period 1 September 20X2 to 28 February 20X3.  The value of services performed to date amounts to $45,000 out of a total contract value of $60,000.  Only $40,000 of the costs are expected to be recoverable. 

 (2)  Performed consulting services for Bingle costing $8,000 relating to a fixed price $20,000 contract covering the period 1 December to 31 March.  The expected total cost cannot be reliably measured at the year end, but Golf is certain that Bingle will pay the costs incurred to date.

(3)    Sold some drafting paper on 1 November to Francis for $200,000 not due for payment until 1 May 20X3.  Francis cannot return the papers.

Required

How much revenue should be recognised in Golf’s financial statements for the year ended 31 December 20X2?

For item (3), assume a discount rate of 1% per month (12.7% per year compound).  No other transactions require discounting.