31. Lark Corp. has a contract to construct à P4.000.000. The company will begin construction of the cruise ship in early January 20x4 and expects to complete the project sometime in late 20x7. Lark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances. Lark Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Lark Corp. expects to recover all its costs under the contract. During 20x4 and 20x5, the company has the following activity: 20x5 P 2,040,000 Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year 20x4 P 980.000 3.020,000 1,000,000 648.000 1,960.000 1,000,000 1,280,000 On its statement of financial position at December 31, 20x5, what amount will be reported

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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31. Lark Corp. has a contract to construct a P5,000,000 cruise ship at an estimated cost of
P4.000.000. The company will begin construction of the cruise ship in early January 20x4 and
expects to complete the project sometime in late 20x7. Lark Corp. has never constructed a
cruise ship before, and the customer has never operated a cruise ship. Due to this and other
circumstances., Lark Corp. believes there are inherent hazards in the contract beyond the
normal, recuring business risks. Lark Corp. expects to recover all its costs under the contract.
During 20x4 and 20x5, the company has the following activity:
Costs to date
Estimated costs to complete
Progress billings during the year
Cash collected during the year
20x4
P 980,000
3,020,000
1,000,000
648,000
20x5
P 2,040,000
1,960,000
1,000,000
1,280,000
On its statement of financial position at December 31, 20x5, what amount will be reported
for accounts receivable?
P352.000.
P720,000
a.
C.
P72,000.
b.
d.
P2.000,000.
Transcribed Image Text:31. Lark Corp. has a contract to construct a P5,000,000 cruise ship at an estimated cost of P4.000.000. The company will begin construction of the cruise ship in early January 20x4 and expects to complete the project sometime in late 20x7. Lark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances., Lark Corp. believes there are inherent hazards in the contract beyond the normal, recuring business risks. Lark Corp. expects to recover all its costs under the contract. During 20x4 and 20x5, the company has the following activity: Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year 20x4 P 980,000 3,020,000 1,000,000 648,000 20x5 P 2,040,000 1,960,000 1,000,000 1,280,000 On its statement of financial position at December 31, 20x5, what amount will be reported for accounts receivable? P352.000. P720,000 a. C. P72,000. b. d. P2.000,000.
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