ON 31 JANUARY 2011 (PREVIOUS YEAR), AV CO ENTERED INTO A CONTRACT T...

1. On 31 January 2011 (previous year), AV Co entered into a contract to install a line of equipment for TCT Co inVietnam for a total fee of VND1,000 million. The work lasted for three months. By 31 March 2011, the costsactually incurred by AV Co amounted to VND480 million and AV Co had completed 80% of the project. AV Coalso estimated that it would incur an additional VND120 million to complete the remaining 20% of the work.According to the contract, AV Co issued an invoice on 31 March 2011 for 100% of the contract value (i.e.VND1,000 million) despite only having completed 80% of the work.Relevant extracts from AV Co’s books related to this contract (in VND million) are as follows:For the year ended 31 March 2011Income statement Tax return (auditedand accepted bythe tax authoritiesin December 2011)Revenue 800 1,000Cost of sales (480) (600)For the year ended 31 March 2012Income statementRevenue 200Cost of sales (120)The cost of sales of VND120 million reflected the actual costs for the remaining 20% of the work. All of the aboverevenue and expenses were supported by proper documents.