Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 17, Problem 16RE
16 (a)
To determine
Compute the total estimated costs for the contract.
(b)
To determine
Compute the amount of revenue to date.
(c)
To determine
Compute the amount of gross profit recognized.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
1. In 20x1, Electrified Construction Co. enters into a contract to construct a building for a customer. Electrified identifies its performance obligation to be satisfied over time. Electrified measures its progress on the contract based on costs incurred. The contract price is P20M. Electrified has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows:
20x1 20x2 20x3
a. contract cost incurred per yr. 8,160,000 7,320,000 1,920,000
b. billings per year 10,000,000 7,000,000 3,000,000
c. collections on billings per year 9,500,000 6,650,000 3,850,000
d. estimated costs to complete 8,840,000 1,720,000
(at each yr. end)
a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2 and 20x3, respectively.
b. Provide the journal entries under (i) traditional accounting and (ii) PFRS…
In 20x1, Electrified Construction Co. enters into a contract to construct a building for a customer. Electrified indentifies its performance obligation to be satisfied over time. Electrified measures its progress on the contrat based on costs incurred. The contract price is P20M. Electrified has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows:
20x1 20x2 20x3
a. Contract costs incurred per yr. 8,160,000 7,320,000 1,920,000
b. Billings per year 10,000,000 7,000,000 3,000,000
c. Collections on billings per year 9,500,000 6,650,000 3,850,000
Requirements:
a. Compute for the gross profits, revenues, and costs of construction in 20x1, 20x2 and 20x3, respectively.
b. Provide the journal entries under (i) traditional accounting…
In 20x1, Devin Co. enters into a contract to construct a building for a customer. Devin Co. identifies its peromance obligation to be satisfied over time. Devin CO. measures its progress on the contract based on ccosts incurred. The contract price is P10M. Devin has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is provided below:
20x1 20x2 20x3
a. Contract costs incurred to date 3,150,000 5,680,000 7,120,000
b. Biliings per year 4,000,000 5,000,000 1,000,000
c. Collections on billings per year 3,600,000 4,500,000 1,900,000
Requirements:
a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2, 20x3, respectively.
b. Provide the journal entries under (i) traditional accounting and (ii) PFRS 15.
c.…
Chapter 17 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 17 - Prob. 1GICh. 17 - Prob. 2GICh. 17 - When a company recognizes revenue during a period,...Ch. 17 - Prob. 4GICh. 17 - Prob. 5GICh. 17 - What is the proper accounting for a wholly...Ch. 17 - If a seller enters into more than one contract...Ch. 17 - Prob. 8GICh. 17 - Prob. 9GICh. 17 - Prob. 10GI
Ch. 17 - Prob. 11GICh. 17 - Prob. 12GICh. 17 - Prob. 13GICh. 17 - Prob. 14GICh. 17 - Prob. 15GICh. 17 - Prob. 16GICh. 17 - If the standalone selling price of a good or...Ch. 17 - Prob. 18GICh. 17 - Prob. 19GICh. 17 - If the sellers performance creates on asset (e.g.,...Ch. 17 - Describe input and output methods used to measure...Ch. 17 - Prob. 22GICh. 17 - Prob. 23GICh. 17 - Prob. 24GICh. 17 - Prob. 25GICh. 17 - A company should recognize revenue when a. the...Ch. 17 - A contract between one or more parties creates: a....Ch. 17 - Morgan Company and its customer agree to modify...Ch. 17 - Chlorine Corp. has a contract to deliver pool...Ch. 17 - Prob. 5MCCh. 17 - Prob. 6MCCh. 17 - In accounting for a long-term construction...Ch. 17 - Prob. 9MCCh. 17 - Prob. 10MCCh. 17 - CustomTee Inc. contracts with various customers to...Ch. 17 - Yankee Corp. agrees to provide Albany Company 24...Ch. 17 - Prob. 3RECh. 17 - Prob. 4RECh. 17 - LongDrive sells a specialized golf club that has...Ch. 17 - Prob. 6RECh. 17 - VolleyElite runs a volleyball program consisting...Ch. 17 - Enterprise Solutions Inc. licenses its...Ch. 17 - Prob. 9RECh. 17 - Magical Memories sells Florida theme park vacation...Ch. 17 - Prob. 11RECh. 17 - Robotics Inc. contracts with a customer to build a...Ch. 17 - CoolShoes sells its elite tennis shoes to sports...Ch. 17 - Using the information in RE17-13, what journal...Ch. 17 - GameDay sells recreational vehicles along with...Ch. 17 - Prob. 16RECh. 17 - Using the information provided in RE17-16, prepare...Ch. 17 - Prob. 18RECh. 17 - Prob. 19RECh. 17 - Company enters into a contract with Dearborn Inc....Ch. 17 - Consider each of the following scenarios: a. A...Ch. 17 - On August 1, 2019, Aiken Corp. enters into a...Ch. 17 - On January 1, 2019, Spring Fashions Inc. enters...Ch. 17 - On January 1, 2019, Loud Company enters into a...Ch. 17 - Assume the same facts as in El7-5. On July 1,...Ch. 17 - Assume the same facts as in E17-5 and ignore...Ch. 17 - Prob. 8ECh. 17 - GrillMaster Inc. sells an industry-leading line of...Ch. 17 - WaterWorld Inc. operates an aquarium and water...Ch. 17 - Prob. 11ECh. 17 - Jonas Consulting enters into a contract to provide...Ch. 17 - On March 1, 2019, Elkhart enters into a new...Ch. 17 - On January 5, 2019, ShoeKing Corp. sells for cash...Ch. 17 - On January 1, 2019, Piper Company entered into an...Ch. 17 - On January 1, 2019, Fulton Inc. enters into a...Ch. 17 - Prob. 17ECh. 17 - On December 1, 2019, AwakcAllNight Inc. sells...Ch. 17 - Rix Company sells home appliances and provides...Ch. 17 - Assume the same facts as in E17-19, except that...Ch. 17 - Crazy Computer Store sells a back-to-school bundle...Ch. 17 - Each of the following is an independent situation...Ch. 17 - Prob. 23ECh. 17 - Prob. 24ECh. 17 - Koolman Construction Company began work on a...Ch. 17 - Prob. 26ECh. 17 - Each of the following independent situations...Ch. 17 - JustKitchens Inc. provides services to restaurants...Ch. 17 - On January 1, 2019, ForeRunner Inc. enters into a...Ch. 17 - January 2, 2019, TI enters into a contract with...Ch. 17 - Prob. 5PCh. 17 - Prob. 6PCh. 17 - Fender Construction Company receives a contract to...Ch. 17 - SoccerHawk Merchandise Inc. enters into a 6-month...Ch. 17 - Prob. 9PCh. 17 - Prob. 10PCh. 17 - Blackmon Company provides locator services to the...Ch. 17 - Prior to ASU 2014-09 changing the principles...Ch. 17 - The first step in the revenue recognition process...Ch. 17 - Prob. 3CCh. 17 - One of the more difficult issues that companies...Ch. 17 - Prob. 5CCh. 17 - On October 1, 2019, Grahams WeedFeed Inc. signs a...Ch. 17 - On January 1, 2019, Mopps Corp. agrees to provide...Ch. 17 - Prob. 8CCh. 17 - Revenue for a company is recognized for accounting...Ch. 17 - Prob. 10C
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
- In 20x1, Devin Co. enters into a contract to construct a building for a customer. Devin Co. identifies its peromance obligation to be satisfied over time. Devin CO. measures its progress on the contract based on ccosts incurred. The contract price is P10M. Devin has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is provided below: 20x1 20x2 20x3 a. Contract costs incurred to date 3,150,000 5,680,000 7,120,000 b. Biliings per year 4,000,000 5,000,000 1,000,000 c. Collections on billings per year 3,600,000 4,500,000 1,900,000 d. Estimated Costs to complete 3,850,000 1,420,000 Requirements: a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2, 20x3, respectively. b. Provide the journal…arrow_forwardIn 20x1, ABC Co. enters into a contract to construct a building for a customer. ABC identifies its performance obligation to be satisfied over time. ABC measures its progress on the contract based on costs incurred. The contract price is P20,000,000. ABC has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 Contract costs incurred per year Billings per year Collections on billings 20x3 8,160,000 7,320,000 1,920,000 10,000,000 7,000,000 3,000,000 9,500,000 6,650,000 3,850,000 per year Estimated costs to 1911 complete (at each year-end)er from the Student Ha8,840,000 of 1,720,000 "Cheating during examinations, quizzes or plagiarism in connection with any academic work, abetting of the same: 1st violation- How much profit is recognized on the contract in 20x3? suspension with invalidation of grade; 3rd violation- suspensionarrow_forwardOn July 1, 20x1, ABC Construction Co. enters into contract with a customers for the construction of a building. The contract prices is P6M, which is to be billed to the customers periodically based on ABC's progress on the construction . The estimated total contract cost is P4M. The actual costs incurred in 20x1 amounts to P1.2M. 1. The revenue to be recognized in 20x1arrow_forward
- In 20x1, ABC Co. enters into a contact with a customer for the construction of a building. The contract price is P6M. ABC Co. uses the 'cost-to-cost' method in measuring its progress on the contract. - ABC Co. estimates total contract costs at completion of P4M. ABC incurs actual costs of P1M in 20x1. - In 20x2, ABC incurs actual costs of P2.45M and revises its estimate of total contract costs at completion to P4.6M. - ABC completes the construction in 20x3. The actual total cost of the contract is P4.5M. How much is the profit recognized in 20x3?arrow_forwardIn accounting for construction contracts using the percentage of completion method, the gross profit recognized during the year would be the estimated gross profit by the percentage of the costs incurred to date the: Total estimate cost Total cost incurred to date Unbilled portion of the contract price Total contract pricearrow_forwarda) Using the above data, compute the gross profit to be recognised for each of the three years, assuming that the outcome of the contract can be reliably estimated. b) Prepare the journal entries for 2019, 2020 and 2021 financial year to recognise revenue on the assumption that the measure of progress on the contract can be reliably estimated. c) Prepare the journal entries for 2019, 2020 and 2021 financial year, assuming that the measure of progress on the contract cannot be reliably assessed.arrow_forward
- Demonstrate revenue recognition for long-term contracts, both at a point intime when the contract is completed and over a period of time according to thepercentage completed.arrow_forwardA company signs a contract to manufacture a product. The contract includes installation and a maintenance agreement over the life of the product. The product cannot be operated without the installation. This company as well as other companies could provide the installation and maintenance. For this company, what is the number of performance obligation(s) in this contract? Enter 0, 1, 2, or 3.arrow_forwardUnder IFRS 15, when shall the incremental cost of obtaining a contract with a customer be recognized as an asset? When the entity expects to recover those costs. When it is probable that future economic benefits will flow to the entity and the cost can be measured reliably When the costs will decrease the revenue in the future periods. When the costs will provide economic benefits for a period less than 12 months.arrow_forward
- calculate 1)the percentage of completion 2)the total estimated gross profit for the contract 3)the estimated gross profit for the yeararrow_forwardEllicott Construction enters into a contract to design and build a hospital. Ellicott is responsible for the overall management of the project and identifies various goods and services to be provided, including engineering, site clearance, foundation, procurement, construction of the structure, piping and wiring, installation of equipment, and finishing. Under IFRS, does Ellicott have a single performance obligation to the customer in this revenue arrangement? Ellicott select an option (accounts / does not accounts) for the bundle of goods and services as a single performance obligation because the goods or services in the bundle are select an option (highly interrelated / not related ) .arrow_forward1. WHAT IS LONG-TERM CONSTRUCTION CONTRACTS? ELABORATE AND GIVE EXAMPLES OF LOCAL CONSTRUCTION CONTRACTS. DISCUSS THE ACCOUNTING STANDARDS GOVERNING IT. 2. WHAT ARE THE CONSIDERATIONS TO RECOGNIZE ONE AS ADDITIONAL CONTRACT REVENUE? GIVE SOME EXAMPLES OF ADDITIONAL CONTRACT REVENUES. 3. WHAT ARE THE VARIETY OF MEANS A STAGE OF COMPLETION CAN BE ESTIMATED? 4. HOW SHALL THE CONTRACTOR PRESENT IN ITS STATEMENT OF FINANCIAL STATEMENTS THE ACCOUNTS RELATED TO CONSTRUCTION CONTRACT? 5. WHEN THE COMPANY DECIDES TO CHANGE ITS ACCOUNTING FOR CONSTRUCTION CONTRACTS FROM PERCENTAGE OF COMPLETION TO COST RECOVERY METHOD. HOW SHALL THE ACCOUNTING CHANGE BE TREATED?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT