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const2013 [10]
3 years ago
7

As of December 31, 2021, Cady Construction has one construction job for which the construction in prog-ress (CIP) account has a

balance of $20,000 and the billings on construction contract account has a balance of $14,000. Cady has another construction job for which the construction in progress account has a balance of $3,000 and the billings on construction contract account has a balance of $5,000. Indicate the amount of contract asset and/or contract liability that Cady would show in its December 31, 2021, balance
Business
1 answer:
Ierofanga [76]3 years ago
4 0

Answer:

According to "AS 7 - Construction Contracts",Gross amounts receivable / payable from / by customers should be recognized as contract asset / liability in the balance sheet.

For the first job, construction work in progress is greater than the bills raised. Hence there exists contract asset.

Contract asset = Cost incurred - Billing done

= $20,000 - $14,000

= $6,000

For the second job, construction in progress is less than the bills raised. Hence there exists contract liability.

Contract liability = Bills raised - Cost incurred

= $5,000 - $3,000

= $2,000

Hence, Contract asset = $6000 , Contract Liability = $2000

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Paid interest is a hobby you've already been credited or paid for. As noted, before virtually having access to the hobby, it's really accruing. however, once that sum hits our account or balance, it is now known as a paid hobby.

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