ABC Co. started work on an P8,000,000 fixed-pric construction contract in 20x1. Information on the contract as follows: 20x1 20x2 Costs incurred per year 2,850,000 3,670,000 Estimated costs to complete 4,275,000 1,630,000 How much profit (loss) is recognized in 20x2?
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![ABC Co. started work on an P8,000,000 fixed-price
construction contract in 20x1. Information on the contract is
as follows:
20x2
20x1
2,850,000 3,670,000
Costs incurred per year
Estimated costs to complete 4,275,000 1,630,000
How much profit (loss) is recognized in 20x2?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F925dba2e-5496-4bec-824d-e314c61db5bd%2Fe068aac6-93c7-4941-9b96-4c8feecee7dc%2Fjrr51va_processed.jpeg&w=3840&q=75)
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- Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: 2024 2025 Costs incurred during the year $ 316,000 $ 1,700,000 Estimated costs to complete as of 12/31 1,264,000 0 Billings during the year 400,000 1,660,000 Cash collections during the year 290,000 1,770,000 Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time.4. In 2016, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: Costs incurred during the year $238,000 Estimated costs to complete Partial billings Collections 2016 2017 2018 $319,600 $105,000 357,000 139,400 -0- 260,000 210,000 380,000 240,000 200,000 410,000 Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016? a. $102,000 b. $260,000 c. $255,000 d. $425,000The Market Company won a contract to build a shopping center at a price of $300 million. The following schedule details the estimated and actual costs of construction each year as well as the total estimated cost. What amount of revenue will be recognized in Yr. 1 using the percentage completion method? Yr 1 $40,000,000 Yr. 2 $60,000,000 Yr. 3 $70,000,000 Yr. 4 $30,000,000 Total $200,000,000 Select one: a. $60,000,000 b. $50,000,000 c. $0 d. $40,000,000 e. $300,000,000
- On February 1, 2023, Sandhill Contractors agreed to construct a building at a contract price of $3,460,000. The total estimated construction costs would be $1,890,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 Gross profit/ (loss) 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 $ 2,365,000 913,000 1,890,000 1,750,000 2025 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentage complete to 1 decimal place, e.g. 15.2% and final answers to O decimal places, e.g. 5,125.) 2024 -0- 3,460,000 2,950,000 -107450 $ LA 2025 40450Franklin 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?8. How much is the Gross Profit/Loss Realized in 2018? * Triple Take Construction Co. began construction of a project in 2017 for a contract price of P9,600,000. The project is to be completed in 4 years or in the year 2021. The following are the details regarding the construction project 2017 2018 2019 Costs inenered to dnte Estimsted cost to complete Progess Billings to dnte Cash Collectiona for the year 2160,000 4,500,000 7,520,000 6840,000 5,500,000 1,690, 000 2,304,000 4,320,000 7,680,000 1,728.000 3,240,000 5,760,000 9. How much is the Gross Profit/Loss Realized in 2019? * Xurpas Homes entered into a construction agreement in 2018 for the construction of condominium buildings. The original contract price was P20,000,000 but a change order was issued in 2019 that increases the price by P2,000,000. The percentage of completion method is used by the company in recognizing revenue. The following are information regarding the company. 2018 10,200,000 10,200,000 9,800,000 8,760,000…
- Problem on long-term construction Axcel Construction Company has consistently used the percentage of completion method of recognizing income. During 2020, Axcel entered into a fixed price contract to construct an office building for P10,000,000. Information relating to the contract is as follows: 12/31/2020 12/31/2021 Percentage of completion 25% 65% Estimated total cost at completion-- P7,500,000.00 P 8,000,000.00 Income recognized (cumulative) 500,000.00 1,200,000.00 Required: a. Cost incurred to date, 12/31/2020 b. Cost incurred to date, 12/31/2021 Contract costs incurred during 2021| C.On September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a plant's electrical wirings and install a new generator for a total consideration of P10M. The remodeling and the installation single performance obligation treated as a satisfied over time. The expected contract costs Generator LO as follows: Other costs Expected total contract costs 2,500,000 4,000,000 6,500,000 VERSITY Additional information: • ABC Co. uses the cost-to-cost method in measuring its progress towards the complete satisfaction of the performance obligation. • ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator. The customer obtains control of the generator when it is delivered to the site in December 20x1. However, the generator will not be installed until March 20x2. • • ABC Co. regards the cost of the generator as significant in relation to the expected total contract costs-eating during examinations, quizzes or plagiarism in connection . Although ABC Co.…Bella Construction Co. uses the percentage-of-completion method. In 20x1, Bella began work on a contract for $2,477,005; it was completed in 20x2. The following cost data pertain to this contract: Year ended December 31, 20x1 Year ended December 31, 20x2 Costs incurred during the year $869,041 $559,369 Estimated costs to complete at the of year $494,825 - The amount of gross profit to be recognized on the income statement for the year ended December 31, 20x2 is: a. $553,770 b. $339,315 c. $1,048,595 d. $1,113,139
- Crane Corporation uses the completed-contract method. At the end of the first year of a $9023000 contract, the following information is available: Costs to date: Estimated costs to complete Progress billings during the year Cash collected during the year $2021000 O $991000 O $247750 O $275000 O $0 6011000 1811000 1536000 In the first year, Crane should recognize gross profit of Crane Corporation uses the co information is available: Costs to date: Estimated costs to complete Progress billings during the y Cash collected during the yea In the first voor Crano should r Snipping Tool Screenshot copied t Select here to markJRE2 Incorporated entered into a contract to install a pipeline for a fixed price of $2,365,000. JRE2 recognizes revenue upon contract completion. Estimated Cost to Complete. $ 1,660,000 621,000 0 Cost incurred. 2023 2024 2025 $ 272,000 1,710,000 560,000 In 2025, JRE2 would report gross profit (loss) of: . Multiple Choice $(177,000) $84,000, $61,000 $20.222Batanes Construction Company recognized gross loss of P42,000 on its long-term project which has accumulated costs of P490,000. To finish the project, the company estimates that it must incur additional cost of P735,000. The contract price is:* a. P798,000 b. P1,330,000 c. P1,225,000 d. P1,183,000
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