This is under construction contracts in accounting for special transactions subject 1. In 20x1, Electrified Construction Co. enters into a contract toconstruct a building for a customer. Electrified identifies itsperformance obligation to be satisfied over time. Electrifiedmeasures its progress on the contract based on costs incurred.The contract price is P20M. Electrified has an unconditionalright to all billings made in accordance with the billing schedulestated in the contract. Information on the construction is asfollows: C. Determine the amounts presented in the financial statements.2. Use the information in the preceding problem except thatElectrified Co. cannot reasonably measure the outcome of theperformance obligation but expects to recover all contractcosts incurred (i.e., ignore the 'estimated costs to complete').Requirements:d. Compute for the gross profits, revenues and costs ofconstruction in 20x1, 20x2 and 20x3, respectively.. Provide the journal entries under (i) traditional accountingand (ii) PFRS 15.

The difference between sales revenue and the cost of products sold is known as gross profit. In the…

In 20x1, Electrified Construction Co. ente construct a building for a customer. Elec performance obligation to be satisfied o- measures its progress on the contract base The contract price is P20M. Electrified h right to all billings made in accordance wit

In 20x1, Electrified Construction Co. ente construct a building for a customer. Elec performance obligation to be satisfied o- measures its progress on the contract base The contract price is P20M. Electrified h right to all billings made in accordance wit

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

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

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This is under construction contracts in accounting for special transactions subject

1. In 20x1, Electrified Construction Co. enters into a contract to
construct a building for a customer. Electrified identifies its
performance obligation to be satisfied over time. Electrified
measures its progress on the contract based on costs incurred.
The contract price is P20M. Electrified 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:

C. Determine the amounts presented in the financial statements.
2. Use the information in the preceding problem except that
Electrified Co. cannot reasonably measure the outcome of the
performance obligation but expects to recover all contract
costs incurred (i.e., ignore the 'estimated costs to complete').
Requirements:
d. Compute for the gross profits, revenues and costs of
construction in 20x1, 20x2 and 20x3, respectively.
. Provide the journal entries under (i) traditional accounting
and (ii) PFRS 15.

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