ABC Co. entered into a long-term construction contract for 3 years. Contract price agreed was P8,300,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: Percentage of completion. Estimated costs to complete How much is the costs of construction for 2022? O 7,920,000 6,240,000 O 8,957,500 O 6,467,500 2021 30% P 3,920,000 2022 82.5% P 1,680,000

ABC Co. entered into a long-term construction contract for 3 years. Contract price agreed was P8,300,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: Percentage of completion. Estimated costs to complete How much is the costs of construction for 2022? O 7,920,000 6,240,000 O 8,957,500 O 6,467,500 2021 30% P 3,920,000 2022 82.5% P 1,680,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

ABC Co. entered into a long-term construction contract for 3 years. Contract price agreed was P8,300,000. The outcome of the contract was estimated reliably. The
following data were ascertained for the contract:
Percentage of completion
Estimated costs to complete
How much is the costs of construction for 2022?
O 7,920,000
Ⓒ6,240,000
O 8,957,500
O 6,467,500
2021
30%
P 3,920,000
2022
82.5%
P 1,680,000

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