What amount of RGP should be reported for the current year if the percentage of completion method is used for all contracts? The Soriano Builders Construction Co. started work on three job sites during the current year. Data relatingto the three jobs are given below:SiteContract Price Cost Incurred Estimated Cost to Complete Billings on Contract Collections onContractP500,000500,000100,000400,00050,000Cebu375,000Davao700,000Palawan 250,000100,000100,000400,000100,000

Answered: What amount of RGP should be reported…

What amount of RGP should be reported for the current year if the percentage of completion method is used for all contracts?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Based on the requirements and guidance of IFRS 15, one of the following is not considered part of…

A: Under the contract costing, there is an agreement made between two parties in respect of performing…

Q: The ability to meet short term obligations is termed

A: A short-term liability is referred to as the financing obligation that being liable to an…

Q: many

A: A lease is a contractual agreement between two parties wherein the lessor (owner) provides the right…

Q: A Contractor submitted its Progress Billing No. 1 to the Project's Owner. Under the contract as well…

A: Progress billing in Contract Progress billing is an accounting technique where the client is…

Q: What rate is used when computing the present value of the new liability arising from modification of…

A: Present value represents the worth of money is more than in the future for the same amount.

Q: An interested bidder to any government procurement should possess the three kinds of eligibility:…

A: The question is related Net Financial Contracting Capacity (NFCC). It is calculated with the help of…

Q: Warranty expense should be recorded in the period: that the product is repaired or replaced. O the…

A: The income statement is prepared to record the revenues and expenses of the current period. The net…

Q: When auditing product warranty liabilities, when should the warranty cost be recognized? Question 1…

A: Answer:- Warranty liability:- A warranty liability is an account that a business uses to record the…

Q: When a company has a contract involving multiple performance obligations, how must the company…

A: Revenue must be realized when the company completes a performance obligation by transferring a…

Q: What is the difference in Forward Contracts and Future Contracts

Q: hich of the following statement about expected vesting period agrees with IFRS 2?

Q: Where can we obtain reliable guidelines on IFRS lease accounting?

A: It is dealing with where can we obtain reliable guidelines on IFRS lease accounting

Q: Rice Corp. recognizes revenue over time to account for long-term contracts and has the following…

A: The revenue under contract costs is recognized on the basis of degree of completion. Degree of…

Q: The basic difference between a direct-financing lease and a sales-type lease is the allocation of…

A: A lease is an agreement that describes terms and conditions. It is an agreement, where one party…

Q: Question 2 On the 1 March 20x1 Interface Unit started working on a contract with a contract price of…

Q: Current liabilities are obligations where liquidation is reasonably expected to require the use of…

A: Liabilities refers to an obligation which is yet not paid for. Liabilities are divided on the basis…

Q: TRUE OR FALSE? Advertising and bonuses are reported in the interim period when incurred.

A: Financial statements are those statements which are prepared at the end of accounting period in…

Q: The IASB and FASB are collaborating on a joint project to revise accounting standards for leases.…

Q: Topic: REVENUE FROM CONTRACTS WITH CUSTOMERS Requirements: a. Identify the performance…

A: The core principle of IFRS 15 is that revenue is recognised when the goods or services are…

Q: Liabilities are obligations of a company to creditor. Select one: True False

A: Liabilities are obligations of a company to creditor. Answer: False Explanation: A liability is a…

Q: agreement at method e-of-completion method ent method

A: The revenue recognition method that is applied to long term contracts is percentage of completion…

Q: 00,000, omplet 1 ning af 2 ning a

A: Lets understand the basics. In percentage of completion method, revenue gets recorded based on the…

Q: Explain an example of long-term construction contracts qualify for revenue recognition over time.

A: As per Accounting Standards Codification, revenue should be recognised when the seller satisfies…

Q: What is a long term liability? a. any debt that extends for more than 1 year b. assets=liabilities +…

A: Long-term liabilities are financial obligations of a company that are due for more than one year in…

Q: In 20x1, Devin Co. enters into a contract to construct a building for a customer. Devin Co.…

A: Comment; We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Explain the impact on lease accounting of other payments, including nonleasepayments, initial direct…

A: Uncertainties in lease transactions: There are several issues with respect to lease transactions…

Q: the lease liability be recognized at January 1, 2020, after making the first payment of P260,000 to…

A: Explanation of Concept "A person or a firm who gives asset on lease to another person or a firm…

Q: A company is accounting for a long-term construction contract where revenue is recognized over time.…

A: Revenue Recognition A corporation should account for revenue as soon as it fulfils the contract's…

Q: 1. WHAT IS LONG-TERM CONSTRUCTION CONTRACTS? ELABORATE AND GIVE EXAMPLES OF LOCAL CONSTRUCTION…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Under the completed-contract method, the Contract Asset/Liability account balance will consist of O…

A: The completed contract method is an accounting approach where revenue and expenses from long-term…

Q: Define semiannual compounding

A: Compounding is the interest charged on interest. When any investment is made for certain years, the…

Q: At the beginning of an operating lease, the lessee will record what asset and liability, if any?

A: During the lease period if ownership of the asset is not transferred to Lessee. Lessee has only…

Q: over what period of time should the cost of a patent aquired by purchased be amortized?

A: Cost of patent acquired by Purchase should be amortized over its useful life which cannot be longer…

Q: How Goodwill is accounted for on financial statement. What is inter-company long-term construction…

A: Goodwill is an intangible asset reported under the non-current assets in the Balance sheet. Only…

Q: What two methods are identified in the Codification as appropriate in accounting for long-term…

A: Long term Construction Contract Construction contract are in different type in accordance with need…

Q: Access the FASB’s Codification Research System® at the FASB website (www.fasb.org) and select Basic…

A: Answer for the each of the following items:

Q: The lessor expenses initial direct costs in the year of incurrence in a(n) direct-financing lease.…

A: Lease - It is type of contractual arrangement under which one party agree to rent assets to another…

Concept explainers

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.

Question

What amount of RGP should be reported for the current year if the percentage of completion method is used for all contracts?

The Soriano Builders Construction Co. started work on three job sites during the current year. Data relating
to the three jobs are given below:
Site
Contract Price Cost Incurred Estimated Cost to Complete Billings on Contract Collections on
Contract
P500,000
500,000
100,000
400,000
50,000
Cebu
375,000
Davao
700,000
Palawan 250,000
100,000
100,000
400,000
100,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Current Attempt in Progress During 2020, Pronghorn Corporation started a construction job with a contract price of $4.62 million. Pronghorn ran into severe technical difficulties during construction but managed to complete the job in 2022. The contract is non-cancellable. Under the terms of the contract, Pronghorn sends billings as revenues are earned. Billings are non-refundable. The following information is available: Costs incurred to date Estimated costs to complete 2020 $660.000 3,465,000 2021 $2,310,000 2,310.000 2022 $4,520,000 -0- Billings for the construction contract were as follows: 2020, $560,000; 2021, $2.150,000; and 2022, $1,910,000. Calculate the balance of the Contract Asset/Liability account at the end of each year using the percentage-of-completion method. (Do not leave any answer field blank. Enter O for amounts)
Access the FASB Accounting Standards Codification at the FASB website ( www.fasb.org ). Determine the specificcitation for accounting for each of the following items:1. Definition of a bargain purchase option.2. The calculation of the lessor’s gross investment in a sales-type lease.3. The disclosures required in the notes to the financial statements for an operating lease.4. The additional disclosures necessary in the notes to the financial statements if the operating lease has a leaseterm greater than one year.
Define Long-term contract
Under ASC 842 when are lease classification and initial measurement determined? within one year of commencement can not be determined at the lease inception at the lease commencement
What is the classification of the lease in the accounting for initial direct costs?
Under the completed-contract method, Question 16 options: a revenue, cost, and gross profit are recognized at the time the contract is completed. b revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed. c revenue, cost, and gross profit are recognized during the production cycle. d None of these answers are correct.
What is the proper accounting treatment to record a variable lease payment indexed off the CPI? Group of answer choices Record the lease liability based on highest annual increase in the CPI for the past 10 years. Calculate the lease liability based on the base payment and debit an additional expense in subsequent years based on the change in the CPI. Calculate the lease liability based on expected payments over the life of the lease after considering increases in the CPI. Capitalize and depreciate the increased payments based on CPI indexing.
5. Which of the following is a characteristic of a current liability? OA current liability must be of a known amount. OA current liability is due within one year or one operating cycle, whichever is longer. A current liability must be of an estimated amount. Current liabilities are subtracted from long-term liabilities on the balance sheet.
The Claims Made Policy Form will pay for looses that occur at which of the following times? After the expiration date of the policy Before the retroactive date, and reported during the policy term During the policy term, and presented after the policy term After the expiration date, and reported during the policy term
A company incurred costs to fulfill a contract that has a four year life. The costs are a direct result of the contract and would not have been incurred had the contract not existed. how should the costs to fulfill the contract be accounted for?
ABC Co. estimates total contract costs at completion d In 20x2. ABC incurs actual costs of P2.45M and revizes its ABC completes the construction in 20x3 The actual total 6. In 20x1, ABC Co. enters into a contact with a customer for the uses the cost-to-cost method in measuring its progress on the estimate of total contract costs at completion to P4.6M. construction of a building. The contract price is P6M. ABC Co. me contract. cost of the contract is P4.5M. How much is the profit recognized in 20x3? a. 420,000 b. 450,000 c 500,000 d. 550,000
If the outcome of a long-term contract can be measured reliably, the preferred accounting method under both IFRS and US GAAP is: A . the cost recovery method.