percentage of completion method
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lake Construction Company has consistently used the percentage of completion method in recognizing income. During 2021, Lake
entered into a fixed-price contract to construct an office building for P10,000,000. Information relating to the contract is as follows:
As of December 31
2021
2022
Percentage of completion
20%
60%
Estimated total cost at completion
P 7,500,000
P 8,000,000
Income recognized (cumulative)
500,00
1,200,000
Contract costs incurred during 2022 were:
3,200,000
3,300,000
3,500,000
4,800,000
Gross profit recognized during 2022 amounted to:
100,000
300,000
600,000
700,000
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