Tony Corporation has a construction contract in progress as follows : Total contract price: $550 million Costs incurred to date: $225 million Estimated cost to completion: $340 million Payments invoiced & received: $290 million Question : Calculate the amount that can be recognized in the income statement and statement of financial position with assumes performance obligation satisfied.

Tony Corporation has a construction contract in progress as follows : Total contract price: $550 million Costs incurred to date: $225 million Estimated cost to completion: $340 million Payments invoiced & received: $290 million Question : Calculate the amount that can be recognized in the income statement and statement of financial position with assumes performance obligation satisfied.

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 18RE

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Tony Corporation has a construction contract in progress as follows : Total contract price: $550 million Costs incurred to date: $225 million Estimated cost to completion: $340 million Payments invoiced & received: $290 million Question : Calculate the amount that can be recognized in the income statement and statement of financial position with assumes performance obligation is satisfied. Please use these items in answering the question: 1. Income Statement: Revenue, Cost of Sales, Gain/Loss. 2. Statement of Financial Position: Cost incurred to date, Recognized Gain/Loss, Receivable/Payable, Contract Asset/Liability.
Blue Construction Corp. began operations in 2023. Construction activity for 2023 is shown below. Blue uses the completed-contract method. Contract 1 2 3 Contract Price $1288000 1443400 1321000 Billings Through 12/31/23 $1270000 601000 787000 Collections Through 12/31/23 $1045000 402000 722000 Costs to 12/31/23 $880000 329000 current liability contract asset/liability, $94000 current asset contract asset/liability, $49000 current asset contract asset/liability, $143000 O accounts receivable, $787000 930000 Estimated Costs to Complete $758000 485000 Which of the following should be shown on the statement of financial position at December 31, 2023 related to Contract 3?
1. In accounting for a long-term construction contracts, using percentage-of-completion (over time) method, the amount of construction in progress account: a. Is the same with the total revenue recognized. b. Is equal to the gross profit for the year plus the actual cost incurred. c. Total contract price multiplied by the percentage of completion. d. All of the choices 2. A franchisor, charges an initial franchise fee of P920,000, with P200,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10% is P545,872. Franchise operations already started and no future services are required to be performed. The amount of revenue from franchise fees is?
ABC Co. entered into a long term construction contract for 3 years. Contract price agreed was P7,500,000. The following data were ascertained for the contract: Cost incurred for the year Estimated cost at completion 4,700,000 O6,250,000 5,275,000 2020 5,300,000 P1,900,000 The outcome of the contract can be estimated reliably. What is the construction cost for the year 2021? 5,700,000 2021 P5,300,000 800,000 2022 P49,500 ?
2. On January 1, 2020, an entity entered into a long-term construction contract with fixed contract price of P5,000,000. The entity billed its client as follows: 30% during 2020, 40% during 2021 and the remainder at the year of project completion. The following data were provided by the cost accountant of the entity: 2020 2021 2022 Cumulative Cost incurred as of the end of the year P2,200,000 P3,600,000 P4,800,000 Estimated remaining cost to complete at the end of the P3,300,000 P900,000 year 1. What is the excess of construction in progress over progress billings on December 31, 2020 under percentage of completion method, cost-to-cost approach? a. 500,000 b. 200,000 c. 300,000 d. 400,000 2. What is the excess of construction in progress over progress billings on December 31, 2021 under cost recovery method? a. 100,000 b. 500,000 c. 300,000 d. 400,000 3. Assume that an architect hired by the company made the following estimates of the project's percentage of completion at 50%, 90% and…
The carrying amount of contract costs relating to a performance obligation and recognised as an asset is $144,000. Further costs required in order to satisfy the obligation are estimated to be $36,000. The consideration receivable by the company when the obligation is satisfied is $158,400. Calculate the amount of the impairment loss (if any) which should be deducted from the contract asset and recognised as an expense. $36,000 $21,600 $50,400 $0
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?
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, 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
Crane Corporation uses the completed-contract method. At the end of the first year of a $9023000 contract, the following information is available: Costs to date: Estimated costs to complete Progress billings during the year Cash collected during the year $2021000 O $991000 O $247750 O $275000 O $0 6011000 1811000 1536000 In the first year, Crane should recognize gross profit of Crane Corporation uses the co information is available: Costs to date: Estimated costs to complete Progress billings during the y Cash collected during the yea In the first voor Crano should r Snipping Tool Screenshot copied t Select here to mark
Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at…