PROBLEM 8-3. ANTICIPATED LOSSAndrei Construction Company began operations on January 1, 2019. During theyear, Andrei entered into a contract with Lindsey Company to construct amanufacturing facility. At that time, Andrei estimated that it would take 3to complete the facility at a total cost of P4,500,000. The total contract price isP6,300,000.estimated that P4,204,200 more will be needed for its completion. LindseyCompany was billed and paid 30% of the contract price.yearsIn 2019, Andrei incurred P1,185,800 in construction costs andThe following year, Andrei Construction Company incurred P3,299,200 and theengineer's estimate of cost to complete is P2,500,000. It is expected that the projectwill be completed thisyear.Required: Compute the amount to be reported as Contract Revenue, Contract Costs andProfit to appear in the income statement for the years 2019 and 2020.

a. First we need to compute the contract liability based on Completed-contract method. For that…

At that time, Andrei estimated that it would take 3 y at a total cost of P4,500,000. The total contract price is Andrei incurred P1,185,800 in construction costs and 200 more will be needed for its completion. Lindsey nd paid 30% of the contract price. years ndrei Construction Company incurred P3,299,200 and the

At that time, Andrei estimated that it would take 3 y at a total cost of P4,500,000. The total contract price is Andrei incurred P1,185,800 in construction costs and 200 more will be needed for its completion. Lindsey nd paid 30% of the contract price. years ndrei Construction Company incurred P3,299,200 and the

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 9MC

See similar textbooks

Similar questions

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?
REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from 24,000 to 46,000 per year. The new machine will cost 80,000; and it will have an estimated life of 8 years and no salvage value. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. The applicable corporate tax rate is 40%, and the firm's WACC is 10%. The old machine has been fully depreciated and has no salvage value. Should the old riveting machine be replaced by the new one? Explain your answer.
Differential analysis report for machine replacement proposal Catalina Tooling Company is considering replacing a machine that has been used in its factory for two years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Annual nonmanufacturing operating expenses and revenue are not expected to be affected by the purchase of the new machine. Instructions List other factors that should be considered before a final decision is reached.
7- Tamra, Inc. began work on a $ 7000,000 contract in 2019 to construct an office building. During 2010, Tamra, Inc. incurred costs of $1,700,00, billed their customers for $1,200,000, and collected $960,000. At December 31,2019, the estimated future costs to complete the project total $3,300,000.Instructions: compute Tamra’s Gross profit to be recognized in 2019?
7. On April 1, 2020, Waleed company entered into a cost-plus fixed-fee contract to construct a power station, estimated to complete in 2 years at a cost of $4,500,000. The fixed fee stipulated in the contract is $675,000. During the year Waleed company incurred cost of $1,200,000. The estimated cost at December 31, 2020 to complete the contract is $1,800,000 and billed for $900,000. Prepare a schedule to compute amount of gross profit to be recognized under the percentage of completion method