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 entries under (i) traditional accounting and (ii) PFRS 15. c. Determine the amounts presented in the financial statements.

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 entries under (i) traditional accounting and (ii) PFRS 15. c. Determine the amounts presented in the financial statements.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 10C

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In 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 20x3 Contract costs incurred per year Billings per year Collections on billings per year 1,920,000 3,000,000 5,650,000 3,850,000 8,160,000 7,320,000 10,000,000 500,000 6600,000 Estimated costs to complete (at each year-end) from the Student Ha8,840,000 1,720,000 ons, quizzes rection with any academic work, abetting of the same: 1st violation How much profit is recognized on the contract in 20x3?
In 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 20x3 Contract costs incurred per year Billings per year Collections on billings per year Estimated costs to 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 complete (at each year-end) 8,840,000 1,720,000 How much profit is recognized on the contract in 20x3?
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.…
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, 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- suspension
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A company is accounting for a long-term construction contract where revenue is recognized over time. The project is built to the customer's specifications, and the customer can make changes as construction is ongoing. It is a 3-year, fixed-fee contract that is presently in its first year. The latest reasonable estimates of total contract costs indicate that the contract will be completed at a profit. The company will submit progress billings to the customer and has reasonable assurance that collections on these billings will be received in each year of the contract. The contract can be canceled at any time by the customer who will retain control of any work done to date. Discuss the following: a. When should revenue from contracts be accounted for overtime versus at a point in time? b. How would the income recognized in each year of this long-term construction contract be determined using the cost-to-cost basis of determining progress toward satisfaction of the performance…
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