Freemont Inc. started work on a construction contract in 2015. The contract price is P40 million. However, if the cumulative inflation rate exceeds 20%, the contract price shall be increased by 10%. Cost escalations on the contract are probable as to recovery. The following information is presented. What is the realized gross profit for 2016? * 2015 2016 P9, 600,000 Costs incurred to date P18,000,000 Estimated cost to complete 14,400,000 6,000,000 Cumulative inflation rate 154 22% P6,400,000 P5,600,000 P8,600,000 P15,000,000 DM. Inc. worked on a P10,500,000 contract in 2016 to construct an office 3 points
Freemont Inc. started work on a construction contract in 2015. The contract price is P40 million. However, if the cumulative inflation rate exceeds 20%, the contract price shall be increased by 10%. Cost escalations on the contract are probable as to recovery. The following information is presented. What is the realized gross profit for 2016? * 2015 2016 P9, 600,000 Costs incurred to date P18,000,000 Estimated cost to complete 14,400,000 6,000,000 Cumulative inflation rate 154 22% P6,400,000 P5,600,000 P8,600,000 P15,000,000 DM. Inc. worked on a P10,500,000 contract in 2016 to construct an office 3 points
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
with solution please
Transcribed Image Text:Freemont Inc. started work on a construction contract in 2015. The
contract price is P40 million. However, if the cumulative inflation rate
exceeds 20%, the contract price shall be increased by 10%. Cost
escalations on the contract are probable as to recovery. The following
information is presented. What is the realized gross profit for 2016? *
2015
2016
Costs incurred to date
P9, 600,000
P18,000,000
Estimated cost to complete
14,400,000
6,000,000
Cumulative inflation rate
15%
223
P6,400,000
P5,600,000
P8,600,000
P15,000,000
DM. Inc. worked on a P10,500,000 contract in 2016 to construct an office 3 points
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
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education