Q9. Al-Duqum Construction Company has a contract to construct a OMR 9,000,000 bridge atan estimated cost of OMR 8,000,000. The contract is to start in July 2020, and the bridge is to becompleted in October 2022. The following data pertain to the construction period.Details202020212022Costs to dateOMR 4,000,000 OMR 5,832,000 OMR 8,100,000Estimated costs to complete4,000,0002,268,000-0-1,800,0004,800,0002,400,000Progress billings during the yearCash collected during the year1,500,0003,500,0004,000,000Instructions: Using the percentage-of-completion method for long-term contracts, compute theestimated gross revenue, gross profit that would be recognized during 2020 and 2021 year of theconstruction period.

Answered: etails 2020 2021 OMR 4,000,000 OMR…

etails 2020 2021 OMR 4,000,000 OMR 5,832,00 ts to complete ngs during the year d during the year 4,000,000 2,268,00 1,800,000 4,800,00 1,500,000 3,500,00

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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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Q9. Al-Duqum Construction Company has a contract to construct a OMR 9,000,000 bridge at
an estimated cost of OMR 8,000,000. The contract is to start in July 2020, and the bridge is to be
completed in October 2022. The following data pertain to the construction period.
Details
2020
2021
2022
Costs to date
OMR 4,000,000 OMR 5,832,000 OMR 8,100,000
Estimated costs to complete
4,000,000
2,268,000
-0-
1,800,000
4,800,000
2,400,000
Progress billings during the year
Cash collected during the year
1,500,000
3,500,000
4,000,000
Instructions: Using the percentage-of-completion method for long-term contracts, compute the
estimated gross revenue, gross profit that would be recognized during 2020 and 2021 year of the
construction period.

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