Under IFRS 15, assuming the outcome of construction can be estimated reliably, what is the realized gross loss to be recognized by MDC for the year ended December 31, 20x22? On July 1, 20x31, Torela Company, a construction company, entered into a contract to construct a commercial building for a customer on customer-owned land for promised consideration of P1,000,000 and a bonus of P200,000 if the building is completed within 24 months. An inception date, the entity expects total construction costs of P700,000 to complete the building. The entity accounts for the promised bundle of goods and services as a single performance obligation satisfied over time in accordance with paragraph IFRS 15 because the customer controls the building during construction. At contract inception, the entity cannot conclude that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur with respect to inclusion of bonus to contract price. Completion of the building is highly susceptible to factors outside the entity’s influence, including weather and regulatory approvals. In addition, the entity has limited experience with similar types of contracts. The entity determines that the input measure, on the basis of cost incurred, provides an appropriate measure of progress towards complete satisfaction of the performance obligation. As of December 31, 20x31, the construction costs incurred to date by Torela Company is P420,000. In the first quarter of the 20x32, the parties of the contract agree to modify the contract by changing the floor plan of the building. As a result, the fixed consideration and expected costs increase by P150,000 and P120,000, respectively. In addition, the allowable time for achieving the P200,000 bonus is extended by 6 months to 30 months from the original contract inception date. At the date of the modification, on the basis of its experience and the remaining work to be performed, which is primarily inside the building and not subject to weather conditions, the entity concludes that it is highly probable that including the bonus in the transaction price will not result in a significant reversal in the amount of cumulative revenue recognized. Despite the changes, the contractor evaluates that the remaining goods and services to be provided using the modified contract are not distinct from the goods and services transferred on or before the date of contract modification; that is, the contract remains a single performance obligation. For the year ended December 31, 20x32, Torela Company incurred construction costs of P195,000. Under IFRS 15, what is the balance of (1) Construction in Progress as of December 31, 20x32 ?
Under IFRS 15, assuming the outcome of construction can be estimated reliably, what is the realized gross loss to be recognized by MDC for the year ended December 31, 20x22?
On July 1, 20x31, Torela Company, a construction company, entered into a contract to construct a commercial building for a customer on customer-owned land for promised consideration of P1,000,000 and a bonus of P200,000 if the building is completed within 24 months. An inception date, the entity expects total construction costs of P700,000 to complete the building. The entity accounts for the promised bundle of goods and services as a single performance obligation satisfied over time in accordance with paragraph IFRS 15 because the customer controls the building during construction. At contract inception, the entity cannot conclude that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur with respect to inclusion of bonus to contract price. Completion of the building is highly susceptible to factors outside the entity’s influence, including weather and regulatory approvals. In addition, the entity has limited experience with similar types of contracts. The entity determines that the input measure, on the basis of cost incurred, provides an appropriate measure of progress towards complete satisfaction of the performance obligation. As of December 31, 20x31, the construction costs incurred to date by Torela Company is P420,000.
In the first quarter of the 20x32, the parties of the contract agree to modify the contract by changing the floor plan of the building. As a result, the fixed consideration and expected costs increase by P150,000 and P120,000, respectively. In addition, the allowable time for achieving the P200,000 bonus is extended by 6 months to 30 months from the original contract inception date. At the date of the modification, on the basis of its experience and the remaining work to be performed, which is primarily inside the building and not subject to weather conditions, the entity concludes that it is highly probable that including the bonus in the transaction price will not result in a significant reversal in the amount of cumulative revenue recognized. Despite the changes, the contractor evaluates that the remaining goods and services to be provided using the modified contract are not distinct from the goods and services transferred on or before the date of contract modification; that is, the contract remains a single performance obligation. For the year ended December 31, 20x32, Torela Company incurred construction costs of P195,000.
Under IFRS 15, what is the balance of (1) Construction in Progress as of December 31, 20x32 ?
Step by step
Solved in 7 steps
