5. At contract inception, Friedland Co. assessed the contract inaccordance with the principles of PFRS 15 and concludes thatit has a single performance obligation that is satisfied at apoint in time, which is when the construction is completedand legal title over the constructed building is transferred tothe customer. How much are the gross profit, revenue andcost of construction recognized in 20x2, respectively?Gross profitRevenueCost of constructiona. 00.3,920,0002,400,000b. 03,920,000C. 02,400,000d. (420,000)0.0. Use the following information for the next three questions:In 20x1, Friedland Co. entered into a contract with a customer forthe construction of a building. The contract price is a fixed fee ofP12,000,000. Information on the contract is shown below:20x120x2Costs incurred per yearEstimated costs to complete3,920,0005,080,0005,880,0001,000,000

solution concept If the contract has a single performance obligation , and that point is when the…

Answered: cost of construction recognized in…

cost of construction recognized in 20x2, respec Revenue Gross profit а. 0 b. 0 Cost of construction 0. 3,920,000 0. 3,920,000 2,400,000 2,400,000 С. 0 d. (420,000) 0. 0.

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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Question

5. At contract inception, Friedland Co. assessed the contract in
accordance with the principles of PFRS 15 and concludes that
it has a single performance obligation that is satisfied at a
point in time, which is when the construction is completed
and legal title over the constructed building is transferred to
the customer. How much are the gross profit, revenue and
cost of construction recognized in 20x2, respectively?
Gross profit
Revenue
Cost of construction
a. 0
0.
3,920,000
2,400,000
b. 0
3,920,000
C. 0
2,400,000
d. (420,000)
0.
0.

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