A Corporation began construction work in 2019 for a project with a contract price of P8,000,000. The Corporation uses the percentage-of-completion (Over time) method. The financial statements for 2019 relating to the contract shows the following: Accounts receivable               P500,000 Construction in progress       1,600,000 Progress billings to date        1,500,000 Gross profit earned in               200,000   1.) Compute the cash collections for the year 2019 2.) Compute the costs incurred to date on the year 2019.

Q: On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The…

A: Step 1: 1. Compute the amount at which the cost of the building should be recorded as follows:

Q: Petty Corp, a calendar year-end company, began construction of a bullding on April 1, 2020. On this…

A: The interest amount is to be capitalized on qualifying assets. The loan amount specifically for the…

Q: In 2018, SM Residences entered into a 3-year agreement in to construct a condominium project for a…

A: A company has to recognize revenue and expenses in the year they are earned and incurred,…

Q: On January 1, 2021, the Marjlee Company began construction of an office building to be used as its…

A: The question is related to Borrowing Cost. Weighted Average rate is calculated on long term loan…

Q: Likes Company started construction of a low-rise building for its own use on January 1, 2021.   Upon…

A: Capitalized interest cost = Interest on P10,000,000 @12% + Interest on P600,000 @ 15% - Interest…

Q: Marie Company had a 10% P3,000,000 specific construction loan and 12% P25,000,000 general loan…

A: Interest on specific loan for 2022 = specific construction loan x interest rate x no. of months/12 =…

Q: ) On July 31, 2020, Amsterdam Company engaged Minsk Tooling Company to construct a special-purpose…

A: a.    Calculate weighted-average accumulated expenditures, avoidable interest, and total interest…

Q: On July 31, 202O, Teal Company engaged Minsk Tooling Company to construct a special-purpose piece of…

A: The question is based on the concept of Financial Accounting.

Q: During 2019, Bing Company constructed its own equipment costing P5,000,000. The weighted average…

A: The question is based on the concept of Accounting Standard on Borrowing Cost.

Q: Marauder Company borrowed P15,000,000 at 12% to finance in part the construction of a new building…

A: Given data, Company borrowed P15,000,000 at 12% interest rate Expenditure =P10,000,000   ●1.What…

Q: Marie Company had a 10% P3,000,000 specific construction loan and 12% P25,000,000 general loan…

A: Amount of interest capitalized as cost of the new building: Borrowing cost to be capitalized in 2021…

Q: At December 31, 2019, Afro Corp. reported P1,750,000 of appropriated retained earnings for the…

A: Introduction: Balance sheet: All Assets and liabilities are shown in Balance sheet. It tells the net…

Q: On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The…

A: Cost of building:         Annual payment PV Factor at 9% Present Value Year 1 $44,000 0.91743…

Q: On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece…

A: Solution:- a) Calculation of the interest revenue as follows:-

Q: During 2019, Bing Company constructed its own equipment costing P5,000,000. The weighted average…

A: Capitalized interest refers to the amount of interest that is added to the cost of the fixed asset.…

Q: intermediate accounting

A: The unpaid balance of interest is added to the principal amount of loan, this is called interest…

Q: In 2019, Eliza company constructed a new building at a cost of 45,000,000. The expenditures for the…

A: Capitalization Borrowing Cost The usages of the capital borrowing cost is used for construction of…

Q: On January 1, 2021, the Marjlee Company began construction of an office building to be used as its…

A:

Q: Jhun Co. recognizes construction revenues and expenses using the percentage of completion method.…

A: A method under which each and every contract is considered as a cost unit and profit and loss for…

Q: Novak, Inc. has a fiscal year ending April 30. On May 1, 2020, Novak borrowed $10,728,000 at 11% to…

A: Interest to be capitalized to building  since it is a qualifying asset

Q: On January 1, 2021, Raffy Company took out a loan of P24,000,000 in order to finance specifically…

A: The borrowing costs are the interest cost for the loans obtained. The borrowing costs are normally…

Q: On January 1, 2016, the Montgomery Company agreed to purchase a building by making six payments. The…

A: 1.

Q: At December 31, 2019, Afro Corp. reported P1.750,000 of appropriated retained earnings for the…

A: Appropriated retained earnings refers to the portion of earing parked aside for specific purposes.…

Q: On January 1, 2020, Karakaraka Co. started construction of a new office building on January 1, 2020,…

A: Borrowed funds used for building=P20,0002=P10,000

Q: On July 31, 2020, Marin Company engaged Minsk Tooling Company to construct a special-purpose piece…

A: Journal entries are posting of transactions in the books of company and then it is analysed as well…

Q: Balance Corporation borrowed P10,000,000 at 12% to finance in part the construction of a new office…

A: Loan Amount = 10,000,000 Expenditure incurred = 8,000,000 Average Expenditure = 8,000,000/2 =…

Q: On Jan. 1, 2020, the entity started the preparation of its building construction. On the same date,…

A: The question is on IAS 23- Borrowing cost IAS 23 Borrowing Costs requires that borrowing costs…

Q: On January 1, 2021, the Montgomery Company agreed to purchase a building by making six payments. The…

A: Answer: Part 1: PV factor for deferred annuity = PVA factor, n = 6, i = 12% - PVA factor, n = 3, i =…

Q: Jen Company had a 10% P3,000,000 specific construction loan and 12% P25,000,000 general loan…

A: The question is based on the concept of Accounting Standard on Borrowing Cost.

Q: kit Company borrows $6 million at 12% on January 1, 2019, specifically for the purpose of financing…

A: Given as,

Q: On January 1, 2020, Katrina Company obtained a loan of P4,000,000 at an interest rate of 10%…

A: Borrowing cost which are related to the funds used for the qualifying asset till completion, must…

Q: What amount of interest is capitalized on December 31, 2019? 2. What is the interest expense for…

A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…

Q: At December 31, 2019, Afro Corp. reported P1,750,000 of appropriated retained earnings for the…

A: Introduction: Balance sheet: All Assets and liabilities are shown in Balance sheet. It tells the net…

Q: On January 1, 2021, the Marjlee Company began construction of an office building to be used as…

A: Solution: Weighted average interest rate of all other debt Debt Amount Interest rate Interest…

Q: Salman Construction Co. began work on a S3,125,000 contract in 2018, using the…

A: Percentage-of-Completion Method: It refers to an accounting method which is used to record revenues…

Q: On January 1, 2021, the Shagri Company began construction on a new manufacturing facility for its…

A: Date Expenditure x Weight = Average January 1 $500,000 x 12/12 = $500,000…

Q: Dixon Development began operations in December 2021. When lots for industrial development are sold,…

A: The journal entries are prepared to keep the record of day to day transactions of the business.

Q: Xurpas Homes entered into a construction agreement in 2018 for the construction of condominium…

A: Percentage of Completion Method: Revenue from performance obligations  is recognized over a period…

Q: it was wrong i need help

A: Step 1:

Q: BTS Inc. started construction of a building for its own use on January 1, 2021.   Upon completion at…

A: Businesses raise money to finance their projects and expansion activities. The financing is made…

Q: Jules Company started construction of a low-rise building for its own use on January 1, 2021.   Upon…

A: The question is related to Borrowing Cost. There are two types of Borrowing  1. Specific purpose…

Q: On January 1, 2018, the Montgomery Company agreed to purchase a building by making six payments. The…

A: 1)

Q: Black Widow Company borrowed P15,000,000 at 12% to finance in part the construction of a new…

A: Answer Calculation of amount of interest to be capitalized Average expenditures on warehouse =…

Q: On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its…

A: Calculation of Average Construction Expenditure Date Expenditure Weight Average Jan 1 600,000…

Q: MacDonalds Construction Co. was a low bidder on a construction project to build a dam for…

A: Under contract costing, the percentage of completion method revenues and expenses are recognized on…

Q: Marie Company had a 10% P3,000,000 specific construction loan and 12% P25,000,000 general loan…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Jen Company had a 10% P1,000,000 specific construction loan and 12% P20,000,000 general loan…

A: As per IAS 23 , Borrowings costs that are attributable to qualified asset will form part of cost of…

Q: On January 1, 2021, the Marjlee Company began construction of an office building to be used as its…

A: Interest Capitalized=Interest on specific construction loan+Interest at Average cost of borrowing

Q: Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use.…

A: Amount of interest capitalized related to the construction of the building: Amount borrowed = $ 1…

Q: ABC Inc. began operations on July 1,2019. The company recognizes income from long term construction…

A: Solution Concept When the income recognized in financial statement is greater than the income as per…

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.