On July 1, 20x1, ABC Construction Co. enters into contract with a customers for the construction of a building. The contract prices is P6M, which is to be billed to the customers periodically based on ABC's progress on the construction . The estimated total contract cost is P4M. The actual costs incurred in 20x1 amounts to P1.2M.  1. The revenue to be  recognized in 20x1

Q: calculate 1)the percentage of completion  2)the total estimated gross profit for the contract…

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Q: How much profit is recognized from the contract in 20x1?

A:

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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.