2. At December 31, 2017, Carter would report gross amount of Construction in Process as a. $600,000. b. $1,200,000. c. $1,800,000. d. $3,600,000.
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- On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows: Required: 1. Compute the gross profit or loss recognized in 2019 and 2020. 2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows: 2017 2018 2019 Actual cost incurred to date P6,562,500 10,968,750 116,250,000 Esimated cost to complete 4,375,000 1,218,750 - Progress billings 3,000,000 12,000,000 13,125,000 Cash receipts during the year 5,625,000 3,750,000 3,750,000 Using percentage-of-completion method, compute for the following: 1. How much is the realized gross profit in 2017, 2018 and 2019? 2. How much is the Revenue earned in 2018? 3. How much is the CIP net in 2018? 4. How much is the CIP net in 2019? Using zero-profit method (cost recovery), compute for the following: 5. How much is…
- The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows: 2017 2018 2019 Actual cost incurred to date P6,562,500 10,968,750 116,250,000 Esimated cost to complete 4,375,000 1,218,750 - Progress billings 3,000,000 12,000,000 13,125,000 Cash receipts during the year 5,625,000 3,750,000 3,750,000 (Cost Recovery) How much is the realized gross profit in 2017, 2018 and 2019? a. 656,250; (468,750); 1,312,500 b. 0; 0; 1,500,000 c. 1,312,500; 468,750; 656,250 d. 1,312,500; (468,750); 656,250In 2016, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: 2016 2017 2018 Costs incurred during the year $238,000 $319,600 $105,000 Estimated costs to complete 357,000 139,400 -0- Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Refer to Exhibit 17-2. Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016? $255,000 $260,000 $102,000 $425,000During 2016, Green Love Company started a construction work with a contract price of $4,500,000,000. The work was completed in 2018. The following information is available on picture below. (a) Compute the application of the percentage of completion method on a cost to cost basis. (b) Calculate the amount of revenue and gross profit to be recognized annually using the percentage of completion and cost-recovery methods.
- During 2009, Mason Construction, Inc. started work on a P 5,200,000 fixed-price construction contract to be completed in two years. The accounting records disclosed the following data for the year ended December 31, 2009: Cost incurred P 2,650,000Estimated cost to complete 2,720,000Progress billings 2,500,000Collections 2,000,000What amount of net income or loss should have been recognized in 2009? On May 1, 2010, Jollibee Inc., a franchisor, entered into a franchise agreement with Session Delights, a franchisee. The total franchise fees agreed upon is P11,900,000 of which P5,000,000 is payable upon signing and the balance payable in three annual payments. It was agreed that the down-payment is nonrefundable, not withstanding the lack of substantial performance of services by franchisor. What amount of deferred revenue should be reported in the May 1, 2010 financial statements of Jollibee Inc.?On February 1, 2014, Marsh Contractors agreed to construct a building at a contract price of $5,800,000. Marsh estimated total construction costs would be $4,000,000 and the project would be finished in 2016. Information relating to the costs and billings for this contract is as follows: 2014 2015 2016 Total costs incurred to date $1,500,000 $2,640,000 $4,600,000 Estimated costs to complete 2,500,000 1,760,000 -0- Customer billings to date 2,200,000 4,000,000 5,600,000 Collections to date 2,000,000 3,500,000 5,500,000 Instructions Fill in the correct amounts on the following schedule. Part A:…Sage Hill Inc. began work on a $10,700,000 non-cancellable contract in 2020 to construct an office building. During 2020, Sage Hill Inc. incurred costs of $1,352,000, billed its customers for $1,200,000 (non-refundable), and collected $910,000. At December 31, 2020, the estimated future costs to complete the project totalled $3,848,000.
- DM, Inc. works on a P10,500,000 contract in 2015 to construct an office building. During 2015, DM, Inc. uses thecost to cost method. At December 31, 2015, the balances in certain accounts were: Construction in Progress – P3,780,000;Accounts Receivable – P360,000; and Billings on Construction in process – P1,800,000; contract retention – P180,000;Mobilization fee – P140,000. At December 31, 2015, the estimated cost at completion is P7,350,000. Determine the realizedgross profit in 2015Archer Construction Company began work on a $420,000 construction contract in 2017. During 2017, Archer incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At December 31, 2017, the estimated additional costs to complete the project total $162,000. Prepare Archer’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.Metlock Inc. began work on a $11,300,000 non-cancellable contract in 2020 to construct an office building. During 2020, Metlock Inc. incurred costs of $1,092,000, billed its customers for $1,200,000 (non-refundable), and collected $990,000. At December 31, 2020, the estimated future costs to complete the project totalled $3,108,000.Prepare Metlock’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record cost of construction No Entry / Contract Asset/Liability / Materials, Cash, Payables / Revenue from Long-Term Contracts / Accounts Receivable / Construction Expenses enter a debit amount enter a credit amount enter an account…