ABC Co., a private contractor, wins a bid to construct anexpressway for a provincial government, under the followingterms:D. The construction shall be finished within 2 years and thecompany shall operate and maintain the expressway for 8years after the completion of the construction.E. The provincial government shall pay ABC Co. the amountof P20,000,000 per year for 8 years starting year 3. Theprovincial government reserves its rights to collect tollsfrom users of the expressway.F. At the end of the 10th year, ownership and management ofthe expressway shall be transferred to the provincialgovernment.At the inception of the contract, ABC Co. identified thefollowing performance obligations with their related stand-alone selling prices:C. CONSTRUCTION services: Construction costs + 25%D. OPERATION services: Operation costs + 20%MontABC Co. estimated that it will incur total cost of P40,000,000during the 2-year construction period and annual cost ofP5,000,000 for operating the expressway after construction.How much is the total interest income, if any, that will beearned from the BOT Contract?

As per the Provision of PFRS 115 revenue from contract with customers, revenue can be recognize on…

Answered: ABC Co., a private contractor, wins a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Taylor Construction Inc. signed a contract with FSU to build a student residential building with two million dollars by 2021 August; FSU can only pay 1.8 million dollars if Taylor cannot complete the construction by September 1. According to the consideration of the four transaction price types, which type is for the following transaction?
Colorado Construction Co., a private company that reports under ASPE, was contracted by a provincial government to build a bridge over a river. The government owns the land on both sides of the river and it agreed to pay Colorado a fixed fee of $29,750,000 for the bridge. Colorado initially estimated the cost to build the bridge to be $21,500,000. Colorado's year end is December 31. Work began under the contract on July 1, 2019 and was completed on September 30, 2021. Construction activities are summarized below by year: Estimated costs to Amount during the year collected during the year Year Construction costs Progress billings incurred during the year complete (excludes already incurred costs 2019 $8,250,000 $13,000,000 $10,000,000 $12,000,000 2020 12,000,000 5,000,000 10,000,000 6,000,000 2021 5,250,000 9,750,000 11,750,000 Required: a. Provide the journal entries that Colorado would have to record for each year of the bridge contract. Use costs to determine the percentage of…
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Revenue Gross profit (loss) Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. Note: Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. Answer is complete and correct. 2024 $ 2,400,000 5,600,000 2,000,000 1,800,000 2024 $ 3,000,000 $ $ 600,000 $ 2025 2026 4,500,000 $ 2,500,000 900,000 $ 300,000 2025 $ 3,600,000 2,000,000 4,000,000 3,600,000 2026 $ 2,200,000 0 4,000,000 4,600,000
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2-a. In the journal below, complete the necessary journal entries for the year 2024 (credit "Cash, Materials, etc." for construction costs incurred). 2024 $ 2,739,000 5,561,000 2,300,000 2,100,000 Cost incurred during the year Estimated costs to complete as of year-end 2025 $ 3,735,000 1,826,000 4,174,000 3,900,000 2024 $ 2,430,000 5,630,000 2-b. In the journal below, complete the necessary journal entries for the year…
Bank Al-Izz provided working capital to Tijarah Construction. based on the principle of musharakah mutanaqisah amounting to OR 400,000. Profit and loss sharing ratio as agreed by both parties is similar to the ratio of capital contribution which is 40:60 (Bank: Customer) at the beginning of the contract. The repayment shall be equal throughout the contract period. The profit and loss for the above project is as follows: Year 1 Loss of OR 180,000 Year 2 Profit of OR 150,000 Year 3 Profit of OR 220,000 Year 4 Loss of OR 80,000 Determine the profits or losses to be recognised by Bank Al-Izz for Year 1 Year 2 Year 3 Year 4
Tulane tires wrote a contract for $100,000 sale to the new Garden district tour company. Tulane only appreciates greater than 50% chance that Garden will be able to pay the amount that Tulane is entitled to receive under contract. Upon delivery of the tires, assuming no payment has yet been made by Gardens, how much revenue should Tulane recognized under U.S. IFRS?
Franklin Construction entered into a fixed-price contract to build a freeway-connecting ramp for $30 million. Construction costs incurred in the first year were $16 million and estimated remaining costs to complete at the end of the year were $17 million. How much gross profit or loss will Franklin recognize in the first year if it recognizes revenue over time according to percentage of completion? What if instead Franklin recognizes revenue upon contract completion?
The government lent $200,000 to Sweet Industries, who signed a 5-year, zero-interest note dated January 1, 2021 to help finance the construction of a building. The market rate of interest is 4% and the effective interest method of amortization is used. The loan will be forgiven if Sweet provides employment for a specified number of individuals for a specified period of time. If these conditions are not met, the amount is due to the government in full in five years. Sweet believes it will be able to meet the conditions.
Assume that Crane Construction Company has a non-cancellable contract to construct a $4,640,000 bridge at an estimated cost of $4,176,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. (Note that, by the end of 2024, Crane has revised the estimated total cost from $4,176,000 to $4,228,200.) Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year (a1) Account Titles and Explanation (To record cost of construction) (To record progress billings) (To record collections) (To record revenues) 2023 (To record construction expense) 3,173,760 $1,002,240 $2,959,740 $4,228,200 994,000 2024 834,960 1,268,460 2,483,000 Prepare all journal entries required for Crane to account for this contract for 2023. (Credit account titles are automatically indented when the amount is entered. Do not…
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2026 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2024 $ 2,624,000 5,576,000 2,200,000 2025 $ 3,690,000 1,886,000 4,114,000 $ 2,074,600 3,686,000 2,000,000 3,800,000 4,200,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Cost incurred during the year Estimated costs to complete as of year-end 2024 $ 2,420,000 5,620,000 2025 2026 $ 3,810,000 3,120,000 $ 3,220,000 в 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming the following costs incurred and costs to complete Information. 2024 2025 2026 Cost incurred during the year Estimated costs to complete as of…
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: 2024 $ 3,600,000 5,400,000 3,000,000 2,800,000 2025 $ 4,050,000 1,350,000 4,650,000 4,600,000 2026 $ 1,485,000 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year 2,350,000 Cash collections during the year 2,600,000 Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years e
7) In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 3,344,000 $ 3,960,000 $ 1,645,600 Estimated costs to complete as of year-end 5,456,000 1,496,000 0 Billings during the year 2,800,000 4,504,000 2,696,000 Cash collections during the year 2,600,000 4,400,000 3,000,000 Assume that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time.Required:1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).2-b. In the journal below, complete the necessary journal…

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