Chan Builders Inc entered into a contract with George Company to construct a production plant. At that time, Chan Builders estimated that it would take five years to complete the facility at a total cost of P28,800,000. Chan Builders therefore, pegged the total contract price for the construction of the facility at P34,800,000. During 2010, Chan Builders incurred P7,500,000 in construction costs related to the project. Because of rising material and labor costs, the estimated cost to complete the contract at the end of 2010 amounted to P22,500,000. George was billed and paid 30% on the contract price in accordance with the contract agreement. Compute the Contract Asset (Contract Liability) for 2010.
Chan Builders Inc entered into a contract with George Company to construct a production plant. At that time, Chan Builders estimated that it would take five years to complete the facility at a total cost of P28,800,000. Chan Builders therefore, pegged the total contract price for the construction of the facility at P34,800,000. During 2010, Chan Builders incurred P7,500,000 in construction costs related to the project. Because of rising material and labor costs, the estimated cost to complete the contract at the end of 2010 amounted to P22,500,000. George was billed and paid 30% on the contract price in accordance with the contract agreement. Compute the Contract Asset (Contract Liability) for 2010.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 5EA: Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following...
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Chan Builders Inc entered into a contract with George Company to construct a production plant. At that time, Chan Builders estimated that it would take five years to complete the facility at a total cost of P28,800,000. Chan Builders therefore, pegged the total contract price for the construction of the facility at P34,800,000. During 2010, Chan Builders incurred P7,500,000 in construction costs related to the project. Because of rising material and labor costs, the estimated cost to complete the contract at the end of 2010 amounted to P22,500,000. George was billed and paid 30% on the contract price in accordance with the contract agreement. Compute the Contract Asset (Contract Liability) for 2010.
George Co. enters into a contract to build an apartment for Jungle Co. for a fixed fee of ₱20,000,000. At contract inception, George Co. assesses its performance obligations in the contract and concludes that it has a single performance obligation that is satisfied over time. George Co. determines that the measure of progress that best depicts its performance in the contract is input method based on costs incurred. George estimates that the total contract costs would amount to ₱16,000,000 over the construction period. George incurs contract costs of ₱2,000,000 during the year. How much gross profit is recognized for the year?
On Oct. 1, 20x1, ABC Co. enters into a construction contract with a customer. The performance obligation in the contract will be satisfied over time. ABC Co. uses the “cost-to-cost” method in measuring its progress. The estimated total contract cost is ₱10M. In 20x1, ABC Co. incurred a total cost of ₱6M, which includes ₱2M advance payment to a subcontractor (the subcontracted work is not yet started) and ₱200,000 cost of materials not yet installed. ABC Co. does not regard the cost of the unused materials as significant in relation to the expected total contract costs. Moreover, ABC Co. retains control over the unused materials because it can use them in a contract with another customer. What is the percentage of completion in 20x1?
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