JD Construction Company won the recently concluded public bidding wherein the contract was awarded starting January 7, 2019, to construct a bridge for a contract price of P16,800,000 payable in five installments, of which one-fifth ( l /5) of the price to be paid upon completion of each quarter of work, with the final payment due within ten days (as agreed per contract) after the turnover of the acceptance of the bridge. By December 3L 2019, three-quarters of the bridge was completed which was estimated by the company's engineering department; whereupon the third billing was made (cash had been made on the previous two billings). During 2019, a total of P8,400,000 had been paid for costs incurred, and total liability for construction materials purchased still amounted to P2,000,000. It is estimated that an additional P3,600,000 would be required to complete the construction of the bridge. Using the percentage-of-completion/over time to recognize revenue: Using input measure — cost-to-cost method, the realized gross profit for 2019: a. P2,080,000 b. P2,100,000 c. P2,200,000 d. P2,800,000 Using output measure proportional cost approach (engineering estimates), the balance of "Construction in Progress net" at the end of 2019 (CA — current asset; CL — current liability): a. P2,420,000 CA b. P2,420,000 CL c. P12,500,000 CA d. P320,000 CL
TJD Construction Company won the recently concluded public bidding wherein the contract was awarded starting January 7, 2019, to construct a bridge for a contract price of P16,800,000 payable in five installments, of which one-fifth ( l /5) of the price to be paid upon completion of each quarter of work, with the final payment due within ten days (as agreed per contract) after the turnover of the acceptance of the bridge. By December 3L 2019, three-quarters of the bridge was completed which was estimated by the company's engineering department; whereupon the third billing was made (cash had been made on the previous two billings). During 2019, a total of P8,400,000 had been paid for costs incurred, and total liability for construction materials purchased still amounted to P2,000,000. It is estimated that an additional P3,600,000 would be required to complete the construction of the bridge.
Using the percentage-of-completion/over time to recognize revenue:
Using input measure — cost-to-cost method, the realized gross profit for 2019:
a. P2,080,000
b. P2,100,000
c. P2,200,000
d. P2,800,000
Using output measure proportional cost approach (engineering estimates), the balance of "Construction in Progress net" at the end of 2019 (CA — current asset; CL — current liability):
a. P2,420,000 CA
b. P2,420,000 CL
c. P12,500,000 CA
d. P320,000 CL
Step by step
Solved in 3 steps
