JJ Contractors entered into a contract on October 2017 to build a warehouse for Francis Corporation. The total contract price amounting to P10,000,000 was received by JJ upon completion on June 30, 2018. Materials purchased during construction valued at P4,000,000 were paid on June 1, 2018 while a construction equipment worth P3,000,000 (net of VAT) was purchased on January 1, 2018 with the following terms; down payment - 500,000, balance payable every January 1 until fully paid starting 2019. The equipment was estimated to last for 6 years. How much is the VAT payable of JJ for June 30, 2018? a. P360,000 b. P690,000 c. P684,000 d. P0

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Q: percentage of completion method

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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.