ABC. Inc. works on a P5,250,000 contract in 2022 to construct an office building. During 2022, ABC Inc uses the cost to cost method. At December 31, 2022, the balances in certain accounts were: Construction in progress- P1.890,000; accounts receivable - P180,000; and bilings on construction in process- P900,000 contract retention P90,000; mobilization fee - P70,000. At December 31.2022, the estimated cost to completion are P2,352,000. HHow much is the realized gross profit in 2022?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
ABC. Inc. works on a P5,250,000 contract in 2022 to construct an office building. During 2022, ABC Inc uses the cost to cost method. At December 31, 2022, the balances in certain accounts were: Construction in
progress- P1.890,000;
contract retention P90,000; mobilization fee - P70,000. At December 31.2022, the estimated cost to
completion are P2,352,000.
HHow much is the realized gross profit in 2022?
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