Hello
Please help me
I have to prove that this is wrong in accounting

For a project which is 3 year long
Year 2005 2006 2007
Revenue ---- ----- 1000
Cost --- ----- 800
Profit ---- ----- 200

Please help me out

My arguments are it is wrong coz

1 prudence concept
2 IAS 11 construction contract


Please help

hello
plz tell me more abt this question?
is it that in 2005 n 2006 zers no profit cost....
and it is accounted only in 2007?

alisha

I don't know what is your actual problem with this question.

It is of course wrong as per IAS-11.

Please Ellaborate further for more detailed reply!

Regrds,

Muhammad Amir

For a project which is 3 year long
Year 2005 2006 2007
Revenue ---- ----- 1000
Cost --- ----- 800
Profit ---- ----- 200

the revenue in the above example is recorded in the year in whic this 3 year project is completed

no revenues cost and profit are recoded in first 2 years as projest is not complete

if possible please provide the reference of teh IAS paragraphs and book pages if any so that i can add those points in my answer

simply i can say the revenue cost profit is recongnoised as per the the completeted contract basis