Question
Solent Builders: follow a two-year contract recognised over time — revenue by cost progress, a revised cost estimate, and the movement between contract asset, contract liability, receivable and cash.
Statements in this challenge
- 2026 RevenueNumeric Answer
- Journal EntriesJournal Entry
- 2027 RevenueNumeric Answer
- 2027 Gross ProfitNumeric Answer
- Contract LiabilityNumeric Answer
- Statement ImpactStatement Impact
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IFRS 15 — Revenue from Contracts with Customers
Apply the five steps in order: identify the contract, identify the performance obligations, determine the transaction price, allocate it to the obligations, and recognise revenue as each is satisfied. Most errors come from skipping straight to the amount without first separating the obligations.
Common mistakes
- Recognising the full contract price on delivery when a distinct service obligation is still outstanding.
- Allocating the transaction price other than on relative stand-alone selling prices.
- Recognising revenue when cash is received rather than when control transfers.
Further readingIFRS 15: the five-step model