ABC Co. entered into a long term construction contract for 3 years. Contract priceagreed was P7,500,000. The following data were ascertained for the contract:Cost incurred for the yearEstimated cost at completion4,700,000O6,250,0005,275,00020205,300,000P1,900,000The outcome of the contract can be estimated reliably.What is the construction cost for the year 2021?5,700,0002021P5,300,000800,0002022P49,500?

Contract accounting is different from normal accounting transactions as a contract may take more…

ABC Co. entered into a long term construction contract for 3 years. Contract price agreed was P7,500,000. The following data were ascertained for the contract: Cost incurred for the year Estimated cost at completion 4,700,000 6,250,000 5,275,000 2020 5,300,000 P1,900,000 The outcome of the contract can be estimated reliably. What is the construction cost for the year 2021? 5,700,000 2021 P5,300,000 800,000 2022 P49,500 ?

ABC Co. entered into a long term construction contract for 3 years. Contract price agreed was P7,500,000. The following data were ascertained for the contract: Cost incurred for the year Estimated cost at completion 4,700,000 6,250,000 5,275,000 2020 5,300,000 P1,900,000 The outcome of the contract can be estimated reliably. What is the construction cost for the year 2021? 5,700,000 2021 P5,300,000 800,000 2022 P49,500 ?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

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ABC Co. entered into a long-term construction contract for 3 years. Contract price agreed was P8,300,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: Percentage of completion Estimated costs to complete How much is the costs of construction for 2022? O 7,920,000 Ⓒ6,240,000 O 8,957,500 O 6,467,500 2021 30% P 3,920,000 2022 82.5% P 1,680,000
SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2021 December 31, 2022 Percentage of completion 30% 82.5% Estimated cost to complete 1,960,000 840,000 1. What is the total cost incurred in year 2022? С. 1,680,000 D. 3,120,000 A. 4,073,750 В. 840,000 2. The realized gross profit (loss) in year 2022 is A. 650,000 B. 405,000 C. (. 245,000) D. (1,055,000) 3. What is the construction cost of sales for year 2022? С. 3,233,750 D. 4,478,750 A. 3,960,000 В. 3,120,000 4. What is the construction-in-progress as of 2022? А. 3,423,750 C. 2,065,000 В. 3,310,000 D. 2,470,000
SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2017 December 31, 2018Percentage of completion 30% 82.5%Estimated cost to complete 1,960,000 840,000 What is the construction cost of sales for year 2018?A. 3,960,000 C. 3,233,750B. 3,120,000 D. 4,478,750
4SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract:December 31, 2021December 31, 2022Percentage of completion30%82.5%Estimated cost to complete1,960,000840,0001.What is the total cost incurred in year 2022? 1.What is the total cost incurred in year 2022? A.4,073,750 C. 1,680,000. B.840,000. D. 3,120,000 2.The realized gross profit (loss) in year 2022 is A.650,000. C. (. 245,000) B.405,000 D. (1,055,000) 3.What is the construction cost of sales for year 2022? A.3,960,000. C. 3,233,750 B.3,120,000. D. 4,478,750 4.What is the construction-in-progress as of 2022? A.3,423,750. C. 2,065,000 B.3,310,000. D. 2,470,000
SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2017 December 31, 2018Percentage of completion 30% 82.5%Estimated cost to complete 1,960,000 840,000 1. What is the total cost incurred in year 2018?A. 4,073,750 C. 1,680,000B. 840,000 D. 3,120,000 2. The realized gross profit (loss) in year 2018 isA. 650,000 C. (. 245,000)B. 405,000 D. (1,055,000) 3. What is the construction cost of sales for year 2018?A. 3,960,000 C. 3,233,750B. 3,120,000 D. 4,478,750 4. What is the construction-in-progress as of 2018?A. 3,423,750 C. 2,065,000B. 3,310,000 D. 2,470,000
Arab Construction Company began work in 2021 on contract XXXX, which provided for a contract price of €19,200,000. Other details follow: 2021 Costs incurred during the year Estimated costs to complete, as of December 31 Billings during the year Collections during the year OA €1,200,000. B. €1,600,000. C. €4,800,000. €3,200,000 9,600,000 3,600,000 2,400,000 Assume that Arab uses the percentage-of-completion method of accounting. The portion of the total gross profit to be recognized as income in 2021 is D. €6,400,000 €9,800,000 0 14,400,000 15,600,000 202 GUR OM
The Naples Company uses the percentage-of-completion method and the cost-to-cost method for its long-term construction contracts. On one such contract, Naples expects total revenues of P260,000. During the first year, Naples incurred costs pf P50,000 and billed the customer P30,000 under the contract. At what net amount should Naples Construction in Progress for this contract be reported at the end of the first year? a. P 35,000 b. 65,000
Suppose that a contract is started on January 1, 2018, with an estimated completion date of December 31, 2019. The final contract price is P1,500,000. In the first year covering January 1 to December 31, 2018: Cost incurred amounted to P600,000. Half the work on the contract was completed. Certificates of work completed have been issued to the value of P750,000. It is estimated with reasonable certainty that further costs to completion in 2019 will be P600,000. Requirements: 1. The contract is certified at what percentage of completion? 2. At Dec 31, 2018, the entity will recognize how much profit? 3. At Dec 31, 2018, the entity will recognize how much contract asset?
On January 1, 2021, Ka Leody Inc. entered into a long-term construction contract with fixed contract price of P 5,000,000. Ka Leody billed its client as follows: 30% during 2021, 40% during 2022 and the remainder at the end of project completion. The following data were provided by the cost accountant of the Ka Leody Inc: 2020 2021 2022 Cumulative cost incurred as of the end of the year P 2,200,000 P 3,600,000 P 4,800,000 Estimated remaining cost to complete at the end of the year P 3,300,000 P 900,000 What is the revenue to be recognized on December 31, 2021 under percentage of completion method ?
2. On January 1, 2020, an entity entered into a long-term construction contract with fixed contract price of P5,000,000. The entity billed its client as follows: 30% during 2020, 40% during 2021 and the remainder at the year of project completion. The following data were provided by the cost accountant of the entity: 2020 2021 2022 Cumulative Cost incurred as of the end of the year P2,200,000 P3,600,000 P4,800,000 Estimated remaining cost to complete at the end of the P3,300,000 P900,000 year 1. What is the excess of construction in progress over progress billings on December 31, 2020 under percentage of completion method, cost-to-cost approach? a. 500,000 b. 200,000 c. 300,000 d. 400,000 2. What is the excess of construction in progress over progress billings on December 31, 2021 under cost recovery method? a. 100,000 b. 500,000 c. 300,000 d. 400,000 3. Assume that an architect hired by the company made the following estimates of the project's percentage of completion at 50%, 90% and…
Egay Construction Corporation contracted with the province of Pampanga to construct a bridge at a contract price of P16,000,000. Egay Corporation expects to earn P1,520,000 on the contract. The percentage of completion method is to be used and the completion stage is to be determined by estimates made by the engineer. The following schedule 'summarizes the activities of the contract for years x0-x2. Estimate Cost to Cost Year Incurred х0 P4,600,000 4,500,000 5,250,000 xl x2 Engineer's Estimate of Complete P9,640,000 5,100,000 -0- x0 a. P545,600; b. P545,600; Billings Completion 31% 71 58% 100% 60 *A 10% retainer accounts for the difference collections. between billings and br Under the percentage of completion method, using the engineer's estimate as the measure of completion to be applied to revenues and costs, how much is the gross profit earned each year?id x1 x2 P 498,400; P 606,000 P1,044,000; c. P1,760,000; P6,400,000; d. P1,760,000; P1,800,000; Collection on Contract on Billings…
The total contract price of the project is P 1,200,000. This was constructed as follows: Year Cost for the year Completion as of the year 2016 P 432,000 60% 2017 P 184,250 85% 2018 P 103,750 100% The net income to be reported in 2018 under percentage of completion is –