ABC Co., a private contractor, wins a bid to construct an expressway for provincial government, under the following terms: A. The construction shall be finished within 2 years and the company shall operate and maintain the expressway for 8 years after the completion of the construction. B. provincial government shall pay ABC Co. the amount of P20,000,000 per year for 8 years starting year 3. The provincial government reserves its rights to collect tolls from users of the expressway. C. At the end of the 10th year, ownership and management of the expressway shall be transferred to the provincial government. At the inception of the contract, ABC Co. identified the following performance obligations with their related stand- alone selling prices: A. CONSTRUCTION services: Construction costs + 20% B. OPERATION services: Operation costs + 5% ABC Co., estimated that it will incur annual cost of P15,000,000 during the 2 -year construction period and annual cost of P5,000,000 for operating the expressway after construction. How much is the revenue from services to be recognized in Year 5?

ABC Co., a private contractor, wins a bid to construct an expressway for provincial government, under the following terms: A. The construction shall be finished within 2 years and the company shall operate and maintain the expressway for 8 years after the completion of the construction. B. provincial government shall pay ABC Co. the amount of P20,000,000 per year for 8 years starting year 3. The provincial government reserves its rights to collect tolls from users of the expressway. C. At the end of the 10th year, ownership and management of the expressway shall be transferred to the provincial government. At the inception of the contract, ABC Co. identified the following performance obligations with their related stand- alone selling prices: A. CONSTRUCTION services: Construction costs + 20% B. OPERATION services: Operation costs + 5% ABC Co., estimated that it will incur annual cost of P15,000,000 during the 2 -year construction period and annual cost of P5,000,000 for operating the expressway after construction. How much is the revenue from services to be recognized in Year 5?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter13: Property Transactions: Determination Of Gain Or Loss, Basis Considerations, And Nonta Xable Exchanges

Section: Chapter Questions

Problem 85P

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