Explain How a Company Records Revenue and Expenses for a Long-Term

question 8

Essay

Explain how a company records revenue and expenses for a long-term contract under IFRS. Include an explanation of how changes in estimates are accounted for under this method.

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Definitions:

Prime Costs

A calculation in cost accounting that signifies the sum of direct materials cost and direct labor cost.

Direct Materials

Specific raw materials that are traceable to the manufacturing process of a product, serving as an essential component in its production.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants for machinery.

Managerial Accounting

The method of pinpointing, quantifying, examining, and conveying fiscal data to management to achieve a company's objectives.