A Construction Co. entered into a P80M fixed price contract for the construction of a private road. The performance obligation on the contract is satisfied over time. Contractor 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 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 800,000 Depreciation of equipment used in construction 480,000 Depreciation of idle construction equipment 240,000 Costs of moving plant, equipment, and materials to and from the contract site 160,000 Costs of hiring plant and equipment 560,000 Advance payments to subcontractors (subcontracted work is not yet started) 80,000 What is the percentage of completion of the contract as of the end of the first year?
A Construction Co. entered into a P80M fixed price contract for the construction of a private road. The performance obligation on the contract is satisfied over time. Contractor 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 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 800,000 Depreciation of equipment used in construction 480,000 Depreciation of idle construction equipment 240,000 Costs of moving plant, equipment, and materials to and from the contract site 160,000 Costs of hiring plant and equipment 560,000 Advance payments to subcontractors (subcontracted work is not yet started) 80,000 What is the percentage of completion of the contract as of the end of the first year?
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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A Construction Co. entered into a P80M fixed price contract for the construction of a private road. The performance obligation on the contract is satisfied over time. Contractor 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 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 800,000
Depreciation of equipment used in construction 480,000- Depreciation of idle construction equipment 240,000
- Costs of moving plant, equipment, and materials to and from the contract site 160,000
- Costs of hiring plant and equipment 560,000
- Advance payments to subcontractors (subcontracted work is not yet started) 80,000
What is the percentage of completion of the contract as of the end of the first year?
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