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 Costs incurred during the year Realized gross profit/(loss) during the year Percentage of completion as of the end of the year 12/31/2021 12/31/2022 12/31/2023 ? ? P 3740000 P750,000 (P250,000) (P800,000) 50% 37.5% ? What is the balance of Construction in Progress on December 31, 2023?

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 Costs incurred during the year Realized gross profit/(loss) during the year Percentage of completion as of the end of the year 12/31/2021 12/31/2022 12/31/2023 ? ? P 3740000 P750,000 (P250,000) (P800,000) 50% 37.5% ? What is the balance of Construction in Progress on December 31, 2023?

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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A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $590,000; March 31, $690,000; June 30, $490,000; October 30, $870,000. The company arranged a 8% loan on January 1 for $880,000. Assume the $880,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 12% and 7%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. Note: Enter your answers in whole dollars and not in millions. Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34%). Date January 1 Expenditure Weight Average $ 590,000 x 12/12 = $ 590,000 March 31 690,000 x 9/12 = 517,500 June 30 490,000 x 6/12 = 245,000…
Shepard Construction Company has consistently used the percentage-of-completion method. On January 10, 2008, Shepard began work on a $3,000,000 construction contract. At the inception date, the estimated cost of construction was $2,250,000. The following data relate to the progress of the contract: Income recognized on December 31, 2008 P 300,000Cost incurred, January 10, 2008 through December 31, 2009 1,800,000Estimated cost to complete at December 31, 2009 600,000 How much income should Shepard recognized for the year ended December 31, 2009 a. 150,000b. 262,000c. 300,000d. 450,000
Dominion construction is awarded a contract to build a commercial building. The contract price is $1,500,000 and during the first month of the job, the following transactions occurred: Cash expenditures to date $300,000 Total expenditures to date $350,000 Estimated expenditure to complete $1,100,000 Total estimated expenditures $1,450,000 Billing to date $280,000 Cash collected to date $250,000 What is "Revenue to Date" in Cash Method? 350000 280000 250000 300000
DMCI entered into a fixed price contract for the construction of a road for Camella Corp. DMCI determines the stage of completion of construction contracts using the "cost to cost method". The estimated total contract cost is P50 million. The following were the total actual costs incurred by DMCI during the first year of the construction: Cost of negotiating the contract (charge immediately as expense) 500,000 Costs of hiring equipment 700,000 Costs of materials purchased but not yet used in construction 2,500,000 Costs of materials used in construction 15,000,000 Costs of moving plant, equipment and materials to and from the 200,000 contract site Depreciation of equipment used in construction 600,000 Depreciation of idle construction equipment 300,000 Site labor costs 5,000,000 Site supervision costs 1,000,000 How much is the cost incurred to date?
For a construction firm using the cost recovery method, if costs exceed billings ons some contracts by 1,000,000 and billings exceed costs by 800,000 on others, the contracts should ordinarily be reported as a? a. current asset of 200,000 b. current liability of 200,000 c. current asset of 1,000,000 less a contra-current asset of 800,000 d. current asset of 1,000,000 and a current liability of 800,000
MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 20X1 and was completed in 20X2. Information relating to the contract follows: 20X1 20X2 Costs incurred during the year $ 290,000 $ 150,000 Estimated additional cost to complete 145,000 — Billings during the year 260,000 265,000 Cash collections during the year 240,000 285,000 Required: Record the preceding transactions in MSK’s books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. Record the preceding transactions in MSK’s books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. Question: Prepare the entry to record revenue, expense, and completion of the project.
A company constructs a building for its own use. Construction began on January 1 and ended on December 30. The expenditures for construction were as follows: January 1, $590,000; March 31, $690,000, June 30, $490,000; October 30, $870,000. The company arranged a 8% loan on January 1 for $880,000. Assume the $880,000 loan is not specifically tied to the construction of the building. The company's other borrowings, outstanding for the whole year, consisted of a $4 million loan and a $6 million note with interest rates of 12% and 7%, respectively. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year. A company constructs a building for its own use. Construction began on January 1 and ended on December The expenditures for construction were as follows: January 1, $590,000; March 31, $690,000; June 30, $490,000; October 30, $870,0 00. The company arranged a 8% loan on January 1 for $880,000. Assume the $880,000 loan is not…
Builder Inc., a private corporation, self-constructed a new commercial building in 2021. On September 30, 2021, construction was completed, and the building became ready to be used as management intended. However, it began operations on November 1, 2021 when most staff was hired. The following costs were incurred for the building construction: 1. Direct labour costs incurred before October 2021, $450,000 2. Additional direct labour costs incurred in October 2021, $90,000 3. Material purchased for the building in September 2021, $675,000 4. Net rental profit for the temporary use of land as a parking lot, $54,000 5. Allocation of the CEO’s salary, $135,000 What is the cost of the new building? Company follows ASPE. a. $1,215,000 b. $1,071,000 c. $1,161,000 d. $1,296,000 e. $1,125,000
(b) The following costs were incurred in 2016 in the design and construction of a new office building over a nine-month period during 2016: GH . Feasibility study- . Architects' fees W . . . Site clearance (by external demolition professionals). Construction materials Cost of own inventories used in the construction (net realizable value if sold outside the company GH24,000) Internal construction staff salaries during period of construction External contractor costs Income from renting out part of site as storage depot during early phase of construction (12) 10,000 5,000 70,000 5,000 30,000 3,600 340,000 300,000 Required: In accordance with IAS 16 Property, plant and equipment, calculate the amount that should be capitalised as property in the financial statements for the year ending 31 December 2016.
A quantity of steel in the amount of $423,000.0 is needed for a project, payment due (from contractor to steel fabricator) at the project begin date. The steel is expected to be erected in Month 2 and Month 3, with billing at the end of these months and subsequent payment from the owner (to the contractor) at the end of Month 3 and Month 4. Assume half the the payment occurs at the end of Month 3 and the other half at the end of Month 4. Using an annual interest rate of 18%, which is a monthly interest rate of 1.5%, to finance the purchase with a short-term line of credit loan, determine the total interest accumulated for this steel purchase until payment is received (from the owner).
The Market Company won a contract to build a shopping center at a price of $300 million. The following schedule details the estimated and actual costs of construction each year as well as the total estimated cost. What amount of revenue will be recognized in Yr. 1 using the percentage completion method? Yr 1 $40,000,000 Yr. 2 $60,000,000 Yr. 3 $70,000,000 Yr. 4 $30,000,000 Total $200,000,000 Select one: a. $60,000,000 b. $50,000,000 c. $0 d. $40,000,000 e. $300,000,000