Reference no: EM132734935

Question - The company Strawberry inc is an interior design company that follow the standards of IFRS. Strawberry agreed to an interior design project for the Button hotel. Strawberry inc ill complete the project for $200,000 between 2001 to 2004 and the total costs are $90,000. However in 2002 the estimated cost for the project increase to $100,000. Therefore costs were re-estimated for 2003 to be $90,000.

Estimated costs:

2001 - 30,000

2002 - 20,000

2003 - 25,000

2004 - 15,000

Invoice amounts:

2001 - 20,000

2002 - 30,000

2003 - 20,000

2004 - 10,000

Button hotel paid the first invoice in 2001, 2002 invoice was paid in half and the rest of the payment was paid in 2003, then 2004 invoice was paid promptly.

How does percentage cost of completion method affect strawberry inc capability to get funding from Button hotel at the end of 2001 and 2002?