In 20x1, ABC Co. enters into a contract to construct a building for a customer. ABC identifies its performance obligation to be satisfied over time. ABC measures its progress on the contract based on costs incurred. The contract price is P20,000,000. ABC has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 20x3 Contract costs incurred per year Billings per year Collections on billings 8,160,000 7,320,000 1,920,000 10,000,000 7,000,000 3,000,000 9,500,000 6,650,000 3,850,000 per year Estimated costs to complete (at each year-end) 8,840,000 1,720,000 How much profit is recognized on the contract in 20x3?

In 20x1, ABC Co. enters into a contract to construct a building for a customer. ABC identifies its performance obligation to be satisfied over time. ABC measures its progress on the contract based on costs incurred. The contract price is P20,000,000. ABC has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 20x3 Contract costs incurred per year Billings per year Collections on billings 8,160,000 7,320,000 1,920,000 10,000,000 7,000,000 3,000,000 9,500,000 6,650,000 3,850,000 per year Estimated costs to complete (at each year-end) 8,840,000 1,720,000 How much profit is recognized on the contract in 20x3?

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

In 20x1, ABC Co. enters into a contract to construct a building
for a customer. ABC identifies its performance obligation to be
satisfied over time. ABC measures its progress on the
contract based on costs incurred. The contract price is
P20,000,000. ABC has an unconditional right to all billings
made in accordance with the billing schedule stated in the
contract. Information on the construction is as follows:
20x1
20x2
20x3
Contract costs incurred
per year
Billings per year
Collections on billings
per year
Estimated costs to
8,160,000 7,320,000
1,920,000
10,000,000 7,000,000 3,000,000
9,500,000 6,650,000 3,850,000
complete (at each
year-end)
8,840,000 1,720,000
How much profit is recognized on the contract in 20x3?

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