On July 1, 2020, Oliver Construction Corp. contracted to build an office building for Annalise Inc., for a total contract price of P1,950,000 Contract cost incurred to date: 2020 - 150,000; 2021 - 1,200,000; 2022 - 2,100,000 Estimated costs to complete: 2020 - 1,350,000; 2021 - 800,000 Billings to Annalise Inc.: 2020 - 300,000; 2021 - 1,100,000; 2022 - 550,000

On July 1, 2020, Oliver Construction Corp. contracted to build an office building for Annalise Inc., for a total contract price of P1,950,000 Contract cost incurred to date: 2020 - 150,000; 2021 - 1,200,000; 2022 - 2,100,000 Estimated costs to complete: 2020 - 1,350,000; 2021 - 800,000 Billings to Annalise Inc.: 2020 - 300,000; 2021 - 1,100,000; 2022 - 550,000

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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H1. Account
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TK Constructions undertook the construction of Bridge on 01/04/2021.The contract was to be completed in 2 years. The contract price was estimated at Rs.150 Crores. Upto 31/03/2021 the company incurred Rs.120 Crores on the construction. The engineers involve in the project estimated that a further Rs.45 Crores would be incurred for completing work. What amount should be charged to revenue for the year 2020-21 as per the provisions of Accounting Standard -7 Construction Contracts? Show the extract of the Profit & Loss A/c in the books of TK Constructions.
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?
Tam's Pizza, Inc. charges an initial franchise fee of P50,000 for the right to operate as a franchisee of Tam's Pizza for five years. Of this amount, P10,000 is payable when the agreement was signed and the balance in five annual payments of P8,000 each. Tam's is expected to provide continuing services to the franchise during the contract period. The credit rating of the franchisee indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five receipts of P8,000 each discounted at 8% is P31,942. On February 1, 2020, Tam's signed a franchise agreement with Tim's. The agreement further provides that Tam's is entitled to a 3% sales-based royalty. On December 31 , 2020, Tim's reported sales of P628,000.
The Nick Construction Company uses the percentage completion method to record long-term contracts. Information for the most recent years is shown below. 2019 2020 2021 Costs incurred to date 300,000 900,000 1,600,000 Estimated Costs to complete 1,200,000 700,000 0 Billings to date 250,000 800,000 2,000,000 Collections to date 175,000 700,000 2,000,000 Required: Prepare the journal entries for 2019 and 2020 necessary to record
ABC Construction Company began operations in 2020. Construction activity for the first year is shown below. All contracts are with different customers and any work remaining at December 31, 2020 is expected to be completed in 2021. Project Contract Price Billings Collections Actual Costs Additional cost to complete 1 5,600,000 3,600,000 3,400,000 4,500,000 1,125,000 2 6,700,000 2,200,000 2,100,000 1,260,000 5,040,000 3 5,200,000 5,200,000 4,935,125 3,800,000 0 The company uses the percentage of completion method in accounting for its projects. A. The amount of current asset/ liability reported for the projects in the year-end balance sheet is? B. The net profit or loss reported by ABC in its income statement for 2020 is?
The Leto Construction Company began work on a $12.000 contract on 1/1/20. Planned completion was in 2022. The Percentage-of Completion method a used Given the following December 31 2021 $4.200 6,300 5,100 6,000 2020 2022 $11,650 $2,500 Costs incumed to dute Esbinated costs to compiete Bitingu to date Collections to date 7,600 4.000 3,800 12,000 11,900 The 12/31/21 belance of Construction in Progress is Select one O. $4300 Ob S5040 O $5.000 Od $4200 O $4800
Question: Assume that an architect hired by the company made the following estimates of the project’s percentage of completion at 50%, 90% and 100% at the end of 2020,2021, and 2022, respectively, what is the realized gross profit for 2021, using percentage of completion method – output measures as determined by estimates made by the architect?
May I know how to differentiate calculations BETWEEN leasing payment at END-OF-THE YEAR and BEGINNING OF THE YEAR?
A company has entered a construction contract on 1st January 2019. The contract will take 2 years to complete and the final contract price is OMR 6,000,000. At the end of first year 2019 the company incurred a cost of OMR 2,400,000 and 60% of work has been completed. Certificate for work completed have been issued to the value of OMR 3,600,000. It is estimated that a further cost of OMR1, 600, 000 will be incurred in the year 2020 to complete the contract. You are required to calculate the amount due from customer that will be accounted for the year 2019 a.OMR 3,400,000 b.OMR 3,600,000 c.None of the options d.OMR 3,800,000
In February 2020, Sandhill Construction signed a contract and commenced construction on a parking garage. The total contract price was $90.8 million and was expected to be completed in July 2024 at a total estimated cost of $83.0 million. Payment by the customer was to be made in several stages, based on significant events and dates throughout the construction timeline. The customer was to have control over the parking garage and was able to make major changes to the project during the construction process. Sandhill’s year-end was September 30.By the end of September, 2020, Sandhill had incurred $20,750,000 in costs and had invoiced $10,400,000 in progress billings. $7,600,000 of the progress billings had been collected.By September 30, 2021, Sandhill had incurred $40,200,000 in total costs and had invoiced $45,500,000 in progress billings, including the progress billings in 2020. Of the total billings, $30,500,000 in total had been collected. Also, Sandhill reviewed its cost estimates…