Crevar constructs residential properties for clients and reports income by the percentage of completion method. In 2019, Crevar started a P2,000,000 construction contract. Details of his 2019 and 2020 construction follow: 20192020Annual construction costsP200,000 P800,000Estimated cost to finish800,000250,000Extent of completion20%80%Compute the construction income in 2019 and 2020.P200,000;P560,000P400,000;P400,000P200,000;P400,000P400,000;P560,000

Profit on incomplete contract: At the end of an accounting period, it may be found that certain…

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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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Crevar constructs residential properties for clients and reports income by the percentage of completion method. In 2019, Crevar started a P2,000,000 construction contract. Details of his 2019 and 2020 construction follow:

	2019	2020
Annual construction costs	P200,000	P800,000
Estimated cost to finish	800,000	250,000
Extent of completion	20%	80%

Compute the construction income in 2019 and 2020.

P200,000;P560,000

P400,000;P400,000

P200,000;P400,000

P400,000;P560,000

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