1. In 20x1, Electrified Construction Co. enters into a contract to construct a building for a customer. Electrified identifies its performance obligation to be satisfied over time. Electrified measures its progress on the contract based on costs incurred. The contract price is P20M. Electrified has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 20x3 a. contract cost incurred per yr. 8,160,000 7,320,000 1,920,000 b. billings per year 10,000,000 7,000,000 3,000,000 c. collections on billings per year 9,500,000 6,650,000 3,850,000 d. estimated costs to complete 8,840,000 1,720,000 (at each yr. end) a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2 and 20x3, respectively. b. Provide the journal entries under (i) traditional accounting and (ii) PFRS 15. c. Determine the amounts presented in the financial statements.
1. In 20x1, Electrified Construction Co. enters into a contract to construct a building for a customer. Electrified identifies its performance obligation to be satisfied over time. Electrified measures its progress on the contract based on costs incurred. The contract price is P20M. Electrified has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows:
20x1 20x2 20x3
a. contract cost incurred per yr. 8,160,000 7,320,000 1,920,000
b. billings per year 10,000,000 7,000,000 3,000,000
c. collections on billings per year 9,500,000 6,650,000 3,850,000
d. estimated costs to complete 8,840,000 1,720,000
(at each yr. end)
a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2 and 20x3, respectively.
b. Provide the
c. Determine the amounts presented in the financial statements.
2. Use the information in the preceding problem except that Electrified Co. cannot reasonably measure the outcome of the performance obligation but expects to recover all contract costs incurred (i.e., ignore the 'estimated costs to complete').
Requirements:
a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2 and 20x3, respectively.
b. Provide the journal entries under (i) traditional accounting and (ii) PFRS 15.
c. Determine the amounts presented in the financial statements.
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