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How much profit is recognized from the contract in 20x1?

How much profit is recognized from the contract in 20x1?

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 September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a plant's electrical wirings and install a new generator for a total consideration of P10M. The remodeling and the installation single performance obligation treated as a satisfied over time. The expected contract costs Generator are LOU an as follows: 2,500,000 4,000,000 6,500,000 SALL Other costs Expected total contract costs VERSITY Additional information: • ABC Co. uses the cost-to-cost method in measuring its progress towards the complete satisfaction of the performance obligation. • ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator. • The customer obtains control of the generator when it is delivered to the site in December 20x1. However, the generator will not be installed until March 20x2. • ABC Co. regards the cost of the generator as significant in relation to the expected total contract costs-eating during examinations, quizzes or plagiarism in connection • Although ABC Co. acted as a principal in procuring the generator, ABC Co. is not involved in designing or manufacturing the generator. censure to suspension with invalidation of grade; 3rd violation- suspension to dismissal/ non-readmission with invalidation of grade How much profit is recognized from the contract in 20x1? CMPW 131
Transcribed Image Text:On September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a plant's electrical wirings and install a new generator for a total consideration of P10M. The remodeling and the installation single performance obligation treated as a satisfied over time. The expected contract costs Generator are LOU an as follows: 2,500,000 4,000,000 6,500,000 SALL Other costs Expected total contract costs VERSITY Additional information: • ABC Co. uses the cost-to-cost method in measuring its progress towards the complete satisfaction of the performance obligation. • ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator. • The customer obtains control of the generator when it is delivered to the site in December 20x1. However, the generator will not be installed until March 20x2. • ABC Co. regards the cost of the generator as significant in relation to the expected total contract costs-eating during examinations, quizzes or plagiarism in connection • Although ABC Co. acted as a principal in procuring the generator, ABC Co. is not involved in designing or manufacturing the generator. censure to suspension with invalidation of grade; 3rd violation- suspension to dismissal/ non-readmission with invalidation of grade How much profit is recognized from the contract in 20x1? CMPW 131
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