On January 1, 20x1, Agatha Company entered into a long-term construction contract with a fixed contract price of P2,250,000. The construction started on July 1, 20x1, and ended on October 31, 20x3. The chief accountant of Agatha provided the following costs: 20x2 P500,000 P1,832,000 P2,278,125 820,125 20x1 20x3 Contract costs incurred to date Estimated costs to complete at the end of the year 1,500,000 REQUIRED: Assuming the outcome of the construction can be estimated reliably, and the company decided to employ cost-to-cost method, compute the following: 5. Realized gross profit (loss) for the year ended December 31, 20x1 6. Percentage of completion for 20x2 7. Anticipated loss

On January 1, 20x1, Agatha Company entered into a long-term construction contract with a fixed contract price of P2,250,000. The construction started on July 1, 20x1, and ended on October 31, 20x3. The chief accountant of Agatha provided the following costs: 20x2 P500,000 P1,832,000 P2,278,125 820,125 20x1 20x3 Contract costs incurred to date Estimated costs to complete at the end of the year 1,500,000 REQUIRED: Assuming the outcome of the construction can be estimated reliably, and the company decided to employ cost-to-cost method, compute the following: 5. Realized gross profit (loss) for the year ended December 31, 20x1 6. Percentage of completion for 20x2 7. Anticipated loss

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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Long-term Contracts Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it has one performance obligation which is satisfied over time. Using the following information for Year 1, compute Clorad's (a) total estimated costs for the contract, (b) revenue to date, and (c) gross profit recognized. Year 1 (of 4-year project): Construction costs incurred during the year $174,000 Estimated costs to complete the contract 426,000 Partial billings to customers 100,000 Collections from customers 25,000 Total contract price 1,000,000 (a) Total estimated costs for the contract $ (b) Revenue to date $ (c) Gross profit recognized $
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