In the case of a fixed price contract,AASB 111 specifies four conditions that must all be met in order for the percentage-of-completion method to be applied.These conditions include:
A) Costs related to the contract can be clearly identified and measured reliably.
B) It is probable that the economic benefits arising from the contract will flow to the contractor.
C) The entity commissioning the work has a good credit rating and is able to pay its debts.
D) Costs related to the contract can be clearly identified and measured reliably and it is probable that the economic benefits arising from the contract will flow to the contractor.

Question

Quizplus · Accepted Answer

AASB 111 specifies that in order for the percentage-of-completion method to be applied to a fixed price contract, both conditions A and B must be met. These conditions state that costs related to the contract can be clearly identified and measured reliably, and it is probable that the economic benefits arising from the contract will flow to the contractor. Conditions C is not relevant to the application of the percentage-of-completion method.

In the Case of a Fixed Price Contract,AASB 111 Specifies