Construction Companies: NASS Construction Group2021The following are extracts from the NASSConstruction Group 2021 Financial statements10 CONTRACT ASSETS31 December202131 December2020300,133Cost incurred plus attributable profits on contracts-in-progressProgress billings made towards contracts-in-progress264,569(241,027)(262,815)23,54237,318Allowance for impairment losses(850)(1,082)22,69236,23615 CONTRACT LIABLITIES31 December202131 December2020Progress billings received and receivable16,874Costs incurred plus recognised profits on contracts-in-progress31,227(23,096)(4,150)12,7248,131(a) With reference to the NASS Construction Group2021 Financial statements, explain how contractrevenue is measured in a construction company.(b) With reference to the above extract,explain contract assets and contractliabilities and their components shown in theabove extracts

Contract Account In the contract Accounting there are number ways the revenue which are recognized…

Answered: (a) With reference to the NASS…

(a) With reference to the NASS Construction Group 2021 Financial statements, explain how contract revenue is measured in a construction company. (b) With reference to the above extract, OY ain

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In 20x1, XYZ Company enters into a construction contract with a customer. The contract price is P10,000,000.Information on the contract follows:20X1 20X2 20X3Contract costs incurred during the year P2,645,132 P236,451 P2,657,000Estimated costs to complete 2,697,451 2,116,777 -Progress Billings 5,000,000 3,000,000 2,000,000Collections on progress billings 2,000,000 4,000,000 4,000,000Using the cost-to-cost method, compute the following: Note: Use up to two (2) decimal places in presenting the answer for percentage of completion. Use six (6)decimal places when applying the percentage.7. Realized gross profit in 20x2 _____________8. The balance of "Contract Liability" at the end of 20x2 _____________9. Revenue that should be recognized in 20x3 _____________10. Realized gross profit in 20x3
In 20x1, XYZ Company enters into a construction contract with a customer. The contract price is P10,000,000.Information on the contract follows:20X1 20X2 20X3Contract costs incurred during the year P2,645,132 P236,451 P2,657,000Estimated costs to complete 2,697,451 2,116,777 -Progress Billings 5,000,000 3,000,000 2,000,000Collections on progress billings 2,000,000 4,000,000 4,000,000 Using the cost-to-cost method, compute the following: Note: Use up to two (2) decimal places in presenting the answer for percentage of completion. Use six (6)decimal places when applying the percentage.4. Balance of "Contract Liability" at the end of 20x1 _____________5. Percentage of completion for 20x2 _____________6. Revenue that should be recognized in 20x2 _____________
A construction company has the following data concerning one of its contracts. £m Contract price 2.00 Value certified 1.30 Cash received 1.20 Costs incurred 1.05 Cost of work certified 1.00 The company estimates the attributable profit on contracts based on the proportion of the value of work certified that has been paid by the client. The profit to be attributed to the contract is A £272,485 B £274,586 C £276,923 D £280,410
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…
E12. WEIS Construction Company uses the percentage-of-completion method of accounting. In 2020, WEIS began work under contract #E2-D2, which provided for a contract price of $2,187,000. Other details follow: 2020 2021 Costs incurred during the year $658,560 $1,408,000 Estimated costs to complete, as of December 31 909,440 –0– Billings during the year 421,000 2,187,000 Collections during the year 348,000 1,527,000 (a) What portion of the total contract price would be recognized as revenue in 2020? In 2021? Revenue recognized in 2020 $ Revenue recognized in 2021 $ (b) using the information above, but assuming the company uses the completed-contract method of accounting, what portion of the total contract price would be recognized? Revenue recognized in 2020 $ Revenue recognized in 2021 $
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Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below:2018 2019Costs incurred during the year $ 300,000 $ 1,575,000Estimated costs to complete as of 12/31 1,200,000 –0–Billings during the year 380,000 1,620,000Cash collections during the year 250,000 1,750,000Required:1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortelrecognizes revenue over time according to percentage of completion
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Entity 2 entered contracts with two separate customers on 1 January 2022. The following information relates to these two contracts for 2022. A B £’000 £’000 Total contract price 40,000 40,000 Costs incurred to date 12,000 12,000 Anticipated further costs to completion 18,000 18,000 Cumulative progress billings invoiced 10,000 10,000 Cumulative progress billings received 8,000 8,000 Only contract A’s performance obligation is satisfied over time. Entity 2 is using the input method to determine the percentage of completion. Show how these two contracts should be presented in Entity 2’s financial statements for 2022.
Tony Corporation has a construction contract in progress as follows :Total contract price: $550 millionCosts incurred to date: $225 millionEstimated cost to completion: $340 millionPayments 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.