ABC Co. began constructing a condominium on January 1, 2017 for a contract price of P1,250,000. The entity has assured collection of its contract and the costs can be reliably estimated. For the year ended December 31, 2018, ABC Co billed its client an additional 60% of the contract price. Data relating to the construction are as follows: 2017 2018 2019 Construction Progress 300,000 ? ? Estimated Cost to Complete ? ? - Costs Incurred 250,000 600,000 112,500 Excess of CIP over PB 25,000 (125,000) HOW MUCH IS THE GROSS PROFIT/LOSS REALIZED IN 2018? Kindly show your solution in a good accounting form. Thank you!

ABC Co. began constructing a condominium on January 1, 2017 for a contract price of P1,250,000. The entity has assured collection of its contract and the costs can be reliably estimated. For the year ended December 31, 2018, ABC Co billed its client an additional 60% of the contract price. Data relating to the construction are as follows: 2017 2018 2019 Construction Progress 300,000 ? ? Estimated Cost to Complete ? ? - Costs Incurred 250,000 600,000 112,500 Excess of CIP over PB 25,000 (125,000) HOW MUCH IS THE GROSS PROFIT/LOSS REALIZED IN 2018? Kindly show your solution in a good accounting form. Thank you!

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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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

	2017	2018	2019
Construction Progress	300,000	?	?
Estimated Cost to Complete	?	?	-
Costs Incurred	250,000	600,000	112,500

Excess of CIP over PB

25,000

(125,000)

HOW MUCH IS THE GROSS PROFIT/LOSS REALIZED IN 2018?

Kindly show your solution in a good accounting form. Thank you!

Definition Definition Amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item

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