In the first year of construction of a building project, the long-term construction company recognizedgross loss for the year ended under the percentage of completion method. Which of the followingstatements will be certain?I. The construction revenue for the year is equal to ending balance of construction in progress.II. The ending balance of construction in progress is equal to ending balance of progress billing.III. The ending balance of construction in progress under cost method will be the same to the endingbalance of construction in progress under percentage of completion method.IV. The cost of sales for the year is equal to ending balance of progress billing.a. I and III.b. Il only.c. II only.d. I, II and III.

The question is related to the Construction Contracts. In the given question the company is in first…

Answered: In the first year of construction of a…

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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am.111.
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i. Insight Corp. acquired an item of plant at a cost of $800,000 on 1 April 20X0 that is used to produce and package pharmaceutical pills. The plant had an estimated residual value of $50,000 and an estimated life of five years, neither of which has changed. Insight Corp. uses straight-line depreciation. On 31 March 20X2, Insight Corp. was informed by a major customer (who buys products produced by the plant) that it would no longer be placing orders with Insight Corp.. Even before this information was known, Insight Corp. had been having difficulty finding work for this plant. It now estimates that net cash inflows earned from the plant for the next three years will be: B. Year ended: 000.$ 31 March 20X3 220 31 March 20X4 180 31 March 20X5 170 On 31 March 20X5, the plant is still expected to be sold for its estimated realisable value. Insight Corp. has confirmed that there is no market in which to sell the plant at 31 March 20X2. Insight Corp.'s cost of capital is 10% and the…
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