The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method
The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows:
2017 2018 2019
Actual cost incurred to date P6,562,500 10,968,750 116,250,000
Esimated cost to complete 4,375,000 1,218,750 -
Progress billings 3,000,000 12,000,000 13,125,000
Cash receipts during the year 5,625,000 3,750,000 3,750,000
Using percentage-of-completion method, compute for the following:
1. How much is the realized gross profit in 2017, 2018 and 2019?
2. How much is the Revenue earned in 2018?
3. How much is the CIP net in 2018?
4. How much is the CIP net in 2019?
Using zero-profit method (cost recovery), compute for the following:
5. How much is the realized gross profit in 2017, 2018 and 2019?
6. How much is the Revenue earned in 2018?
7. How much is the CIP net in 2018?
8. How much is the CIP net in 2019?
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