ABC Co. a private contractor, wins a bid to construct a railway for the government. The terms of the arrange follows: > Construct a road- completing construction within a year; > Maintain and operate the road for four years. > Resurface the road when the original surface has deteriorated below specified condition. The opera estimates that it will have to undertake the resurfacing at the end of year 3. The operator collects toll fees of P200,000 per year. The contract ends in year 5. The operator estimates th resurfacing expenditure increases by P5,000 for each year that the road is used. The appropriate discount ra contract inception, ABC Co. identifies a single performance obligation for construction services. ABC Co. ma following estimates: Stand Alone Selling Price Forecast cost + 25% YEAR CONTRACT COST Construction Service 200.000
ABC Co. a private contractor, wins a bid to construct a railway for the government. The terms of the arrange follows: > Construct a road- completing construction within a year; > Maintain and operate the road for four years. > Resurface the road when the original surface has deteriorated below specified condition. The opera estimates that it will have to undertake the resurfacing at the end of year 3. The operator collects toll fees of P200,000 per year. The contract ends in year 5. The operator estimates th resurfacing expenditure increases by P5,000 for each year that the road is used. The appropriate discount ra contract inception, ABC Co. identifies a single performance obligation for construction services. ABC Co. ma following estimates: Stand Alone Selling Price Forecast cost + 25% YEAR CONTRACT COST Construction Service 200.000
Chapter3: Income Sources
Section: Chapter Questions
Problem 88P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you