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Determine the realized gross profit (loss) for each year.

Determine the realized gross profit (loss) for each year.

FINANCIAL ACCOUNTING
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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On January 1, 20xl, ABC Company enters into a construction contract which includes a fixed contract price of P144,000 to build a bridge. On December 31, 20x1, the contractor's estimate of the total contract cost is still P96,000. However, by the end of 20x2 the contractor's estimate of contract costs increased to P120,000, excluding the variation below. In 20x2, the customer and the contractor agree to a variation resulting in an increase in contract revenue of P2,400 and estimated additional contract costs of P1,800. Actual cumulative costs incurred to the end of 20x1, 20x2 and 20x3 (the end of the contract) including the costs of the variation are P36,480, P85,260 and P120,500, respectively. At the end of 20x1, 20x2 and 20x3, the customer paid the contractor progress billings of P60,000, P36,000 and P48,000, respectively. The contractor determines the stage of completion of the contract costs incurred for a work performed to date bear to the latest estimated total contract costs. Determine the realized gross profit (loss) for each year. 1. 20x1 2. 20x2 3. 20x3
Transcribed Image Text:On January 1, 20xl, ABC Company enters into a construction contract which includes a fixed contract price of P144,000 to build a bridge. On December 31, 20x1, the contractor's estimate of the total contract cost is still P96,000. However, by the end of 20x2 the contractor's estimate of contract costs increased to P120,000, excluding the variation below. In 20x2, the customer and the contractor agree to a variation resulting in an increase in contract revenue of P2,400 and estimated additional contract costs of P1,800. Actual cumulative costs incurred to the end of 20x1, 20x2 and 20x3 (the end of the contract) including the costs of the variation are P36,480, P85,260 and P120,500, respectively. At the end of 20x1, 20x2 and 20x3, the customer paid the contractor progress billings of P60,000, P36,000 and P48,000, respectively. The contractor determines the stage of completion of the contract costs incurred for a work performed to date bear to the latest estimated total contract costs. Determine the realized gross profit (loss) for each year. 1. 20x1 2. 20x2 3. 20x3
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