Black Builders Co. is a construction firm that uses the percentage of completion method of recognizing income. On August 2, 2019, a contract to build an office condominium was obtained at a price of P8,700,000. Below are the data pertaining to this contract:                                                                                                               2019                2020 Estimated cost at completion                                          P6,525,000     P6,960,000 Cumulative income recognized                                            435,000       1,044,000 Percentage of completion                                                          15%               65% Based on the above information, what is the amount cost of contract incurred during the year ended December 31, 2020? a. 3,741,000 b. 4,611,000 c. 4,176,000

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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.