On July 1, 2020, ABC Construction Corp. contracted to build an office building building for XYZ, Inc. for a total contract price of P975,000
2020
2021
2022
75,000
600,000
1,050,000
Estimated costs to complete the contract
675,000
400,000
Billings to XYZ, Inc
150,000
550,000
Contract cost incurred to date
275,000
1. Under the percentage of completion method, how much is the Construction-in-Progress at Dec ember 31,2021? a. 650,000 b. 575,000 c. 672,000 d. 597,000 2. Under the zero-profit method, how much is the Construction-in-Progress, net of progress Billings at December 31, 2021? a. (125,000) b. 125,000 c. 50,000 d. (50,000) 3. Under the percentage of completion method, how much is the realized gr oss profit (loss) at December 31,2022? a. (75,000) b. (100,000) c. (50,000) d. (72,500) On January 1, 2018, Solid Company accepted a long-term construction project for an initial contract price of P1,000,000 to be completed on June 30,2020. On January 1, 2019, the contract price was increased to P1,500,000 by reason of change in the design of the project. The outcome of the construction contract can be estimated reliably. reliably. The project was completed on December 31, 2020 which resulted to penalty amounting to P200,000 . The entity provided the following data Concerning the direct costs related to the said project for 2018 and 2019:
2018
2019
Costs during the year
440,000
680,000
Remaining estimated costs to complete at year-end
660,000
280,000
4. What is the realized gross profit for the year ended December 31,2019? a. 200,000 b. 80,000 c. 180,000 d. 100,000 5. What is the balance of construction in progress on December 31,2019? a. 1,200,000 b. 80,000 c. 180,000 d. 100,000 On January 1, 2018, Hardrock Company started the construction of a building at a fixed contract price of P1,000,000. On the same date, the customer paid a mobilization fee equal to 5 % of contract price that will be deductible from the first billing. The outcome of construction contract cannot be estimated reliably During 2018, the entity billed the customer equivalent to 30% of the contract price, During 2019, The entity billed again the customer amounting to 20% of the contract. During 2020, The entity billed again the customer amounting to 40% of the contract. The remaining billing was made at the year costs of completion of the project. The entity made collection from the customer at the end of 2018, 2019 and 2020, in the amount of P120,000, P450,000 and P180,000, respectively. The entity provided the following data concerning the direct costs related the said project:
Cumulative costs incurred at year-end Remaining estimated costs to complete at year-end
2018
2019
2020
360,000
800,000
870,000
840,000
250,000
50,000
6 What is the realized gross profit for the year ended December 31,2019? a. b. c. d.
50,000 200,000 150,000 0
7. What is the excess of construction in progress over progress billings or excess of progress billings over construction in progress on December 31, 20 20? a. 30,000 excess billings b. 80,000 excessbillings
c. 20,000 excess construction in progress d. 50,000 excess construction in progress 8. What is the balance of accounts receivable on December 31, 2020? a. 150,000 b. 100,000 c. 120,000 d. 50,000 9. Avista Company is one of ther leading construction firms in the country, On January 1, 2021, it entered into a long-term construction contract with a fixed contract price P4,500,00. The construction started on July 1, 2021 and e nded on October 31, 2023. The following costs we re provided by the chief accountant of Avista Company:
Construction costs incurred to date Estimated costs to complete as of the end of the year
2021
2022
2023
P1,000,000
P2,916,000
P4,556,250
P3,000,000
P1,640,250
P-0-
Assuming the outcome of the construction can be estimated reliably and the company decided to Employ cost-to-cost method, what is the amount of (1) revenue from long-term contract, (2) costs of construction and (3) gross profit/(gross loss), respectively to be reported be Avista Company for the year ended December 31, 2022? a. 1,734,750 and 1,916,000 and (181,250) b. 1,755,000 and 1,936,250 and (181,250) c. 1,859,250 and 1,916,000 and (56,250) d. 1,755,000 and 1,811,250 and (56,250)
