What is the percentage of completion of the contract as of the end of the first year? VALEDICTION Construction Co. entered into a P8OM fixed price contract for the construction of a private road for FAREWELL SPEECH, Inc. The performance obligation on the contract is satisfied over time. VALEDICTION measures its progress on the contract using the "cost-to-cost" method. The estimated total contract cost is P40M. The following were the actual costs incurred by VALEDICTION during the first year of the construction: Costs of negotiating the contract (charged immediately as expense) 400,000 Costs of materials used in construction 12,000,000 Costs of materials purchased but not yet used in construction 2,000,000 Site labor costs 4,000,000 Site supervision costs Depreciation of equipment used in construction Depreciation of idle construction equipment Costs of moving plant, equipment and materials to and from the contract site Costs of hiring plant and equipment Advance payments to subcontractors (subcontracted work is not yet started) 800,000 480,000 240,000 160,000 560,000 80,000 42%

What is the percentage of completion of the contract as of the end of the first year? VALEDICTION Construction Co. entered into a P8OM fixed price contract for the construction of a private road for FAREWELL SPEECH, Inc. The performance obligation on the contract is satisfied over time. VALEDICTION measures its progress on the contract using the "cost-to-cost" method. The estimated total contract cost is P40M. The following were the actual costs incurred by VALEDICTION during the first year of the construction: Costs of negotiating the contract (charged immediately as expense) 400,000 Costs of materials used in construction 12,000,000 Costs of materials purchased but not yet used in construction 2,000,000 Site labor costs 4,000,000 Site supervision costs Depreciation of equipment used in construction Depreciation of idle construction equipment Costs of moving plant, equipment and materials to and from the contract site Costs of hiring plant and equipment Advance payments to subcontractors (subcontracted work is not yet started) 800,000 480,000 240,000 160,000 560,000 80,000 42%

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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