On January 1, 2020, San Juan Builders Inc. accepted a long-term construction project to build a bridge. The outcome of the construction project can be estimated reliably and the contractor decided to employ cost to cost method. The following data are provided by the accountant and project manager concerning the contract price and construction costs for the three years of construction: Year 12/31/2020 12/31/2021 12/31/2022 Contract price as of the end of the year P10,000,000 P15,000,000 P20,000,000 Costs incurred during the year P1,000,000 P5,000,000 P8,000,000 Estimated cost to complete at the end of the year P3,000,000 P4,000,000 P2,000,000 What is San Juan Builders’ realized gross profit / (loss) for the year ended December 31, 2022?

On January 1, 2020, San Juan Builders Inc. accepted a long-term construction project to build a bridge. The outcome of the construction project can be estimated reliably and the contractor decided to employ cost to cost method. The following data are provided by the accountant and project manager concerning the contract price and construction costs for the three years of construction: Year 12/31/2020 12/31/2021 12/31/2022 Contract price as of the end of the year P10,000,000 P15,000,000 P20,000,000 Costs incurred during the year P1,000,000 P5,000,000 P8,000,000 Estimated cost to complete at the end of the year P3,000,000 P4,000,000 P2,000,000 What is San Juan Builders’ realized gross profit / (loss) for the year ended December 31, 2022?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

See similar textbooks

Similar questions

On January 1, 2020, San Juan Builders Inc. accepted a long-term construction project to build a bridge. The outcome of the construction project can be estimated reliably and the contractor decided to employ cost to cost method. The following data are provided by the accountant and project manager concerning the contract price and construction costs for the three years of construction: Year 12/31/2022 12/31/2020 12/31/2021 Contract price as of the end of the year P10,000,000 P15,000,000 P20,000,000 Costs incurred during the year Р1,000,000 P5,000,000 P8,000,000 Estimated cost to complete at the end of the Р3,000,000 P4,000,000 P2,000,000 year What is San Juan Builders' realized gross profit / (loss) for the year ended December 31, 2022?
On January 1, 2021. Robredo Co. started the construction of a building with a fixed contract price of P10,000,000. The outcome of the construction project can be estimated reliably and the contractor decided to employ cost to cost method. The following data are provided by the accountant and project manager concerning the construction costs for the three years of construction: Year 12/31/2021 12/31/2022 12/31/2023 P 3740000 Costs incurred during the year Realized gross profit/(loss) during the year Percentage of completion as of the end of the year ? ? P750,000 (P250,000) (P800,000) 50% 37.5% ? What is the balance of Construction in Progress on December 31, 2023?
Ind
Pharoah Construction entered into a contract to construct a bridge for a contract price of $2.95 million. Construction began in 2019 and was completed in 2021. Below are the details of the transactions related to the contract: 2019 2020 2021 Costs incurred during the year $649,000 $836,000 $693,900 Estimated costs to complete 1,427,800 515,000 0 Calculate the revenue, expenses and gross profit to be recognized each year using the percentage-of-completion method. (Round the percentage completion to 2 decimal places, e.g. 52.75% and other answers to 0 decimal places, e.g. 1,525.) 2019 2020 2021 Revenue $ $ $ Expenses Gross Profit $ $ $
Calculate the amount of revenue to be recognized in 2020 and 2021. Calculate the construction costs to be expensed in 2021. Prepare the journal entry at December 31, 2021, to record long-term contract revenues, expenses, and losses for 2021. What is the balance in the Contract Asset/Liability account at December 31, 2020 and 2021? Show how the construction contract would be reported on the SFP and the income statement for the year ended December 31, 2021. Assume that Cullumber uses the zero-profit or completed-contract method. What would be the journal entry recorded on December 31, 2021?
Entity A started a three-year contract to build a new office building on 1 April 2019. The contract had a fixed price of $90,000,000. The entity will satisfy the performance obligation over time. The entity incurred costs to 31 March 2020 of $77,000,000 and estimated that a further $33,000,000 would need to be spent to complete the contract. The entity measures the progress of contracts using work completed compared to the contract price. At 31 March 2020, a surveyor valued the work completed to date at $63,000,000. REQUIRED: Measure the contract revenue and the contract cost in the Statement of Profit or Loss for the year ended 31 March 2020 respectively.
Assume that Ivanhoe Construction Company has a non-cancellable contract to construct a $4,600,000 bridge at an estimated cost of $4,140,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year Contract price Estimated total cost Estimated gross profit Estimated loss 2023 $1,035,000 3,105,000 *$2,980,800+$1,676,700 955,000 788,000 2025 $2,980,800 $4,657,500 1,676,700 2024 The revised estimates for the bridge contract are as follows. 2,443,000 1,801,000 2023 Original Estimates 2024 Revised Estimates $4,600,000 $4,600,000 4,140,000 4,657.500* $460,000 1,202,000 2,011,000 0 $(57,500)
Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000 bridge at an estimated cost of $4,068,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year Contract price Estimated total cost Estimated gross profit Estimated loss. 2023 *$2,928,960+ $1,647,540 $1,017,000 3,051,000 968,000 817,000 The revised estimates for the bridge contract are as follows. 2024 $2,928,960 1,647,540 2,418,000 1,897,000 2025 $4,576,500 1,134,000 0 1,806,000 2023 Original Estimates 2024 Revised Estimates $4,520,000 $4,520,000 4,068,000 4,576,500* $452,000 $(56,500) Under the percentage-of-completion method, how would Sunland record the long-term contract revenues, expenses, and losses in 2024. Please show…
Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000 bridge at an estimated cost of $4,068,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year Contract price Estimated total cost Estimated gross profit 2023 Estimated loss $1,017,000 3,05 1,000 968,000 The revised estimates for the bridge contract are as follows. 817,000 4,068,000 2024 $2,928,960 $452,000 1,647,540 2,418,000 1,897,000 2025 $4,576,500 2023 Original Estimates 2024 Revised Estimates $4,520,000 $4,520,000 1,134,000 1,806,000 0 4,576,500* $(56,500)
At the beginning of 2021, Batangas Road Construction entered into a contract to build a road for the government. Construction will take four years. The following information as of December 31, 2021 is available for the contract: Total revenue according to contract 10,000,000 Total expected cost 8,000,000 Cost incurred during 2021 1,200,000 Assume that the company estimated percentage complete based on costs incurred as a percentage of total estimated costs. Under the completed contract method, how much revenue will be reported in 2021? None 300,000 1,500,000
Assume that Crane Construction Company has a non-cancellable contract to construct a $4,640,000 bridge at an estimated cost of $4,176,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. (Note that, by the end of 2024, Crane has revised the estimated total cost from $4,176,000 to $4,228,200.) Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year (a1) Account Titles and Explanation (To record cost of construction) (To record progress billings) (To record collections) (To record revenues) 2023 (To record construction expense) 3,173,760 $1,002,240 $2,959,740 $4,228,200 994,000 2024 834,960 1,268,460 2,483,000 Prepare all journal entries required for Crane to account for this contract for 2023. (Credit account titles are automatically indented when the amount is entered. Do not…
In 2021, Crane Corporation began construction work under a three-year contract. The contract price is $ 480000. Crane uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2021, follow: Balance Sheet Accounts receivable—construction contract billings $ 192000 Construction in progress $ 600000 Less contract billings 480000 Costs and recognized profit in excess of billings 120000 Income Statement Income (before tax) on the contract recognized in 2021 $ 120000 How much cash was collected in 2021 on this contract? $ 480000 $ 48000 $ 288000 $ 192000

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

GET THE APP

About FAQ Academic Integrity Sitemap Document Sitemap

Contact Bartleby Contact Research (Essays)High School Textbooks Literature Guides Concept Explainers by Subject Essay Help Mobile App

GET THE APP

Privacy

Your CA Privacy Rights

Your NV Privacy Rights

Cookie Policy

About Ads

Manage My Data

bartleby, a Learneo, Inc. business

Year	12/31/2020	12/31/2021	12/31/2022
Contract price as of the end of the year	P10,000,000	P15,000,000	P20,000,000
Costs incurred during the year	P1,000,000	P5,000,000	P8,000,000
Estimated cost to complete at the end of the year	P3,000,000	P4,000,000	P2,000,000