Engr. Alcayde presented the following information regarding his road construction project which is 50% completed at the end of this year and was 30% completed at end of last year: Contract price Total estimated cost to complete Cost incurred previous year Cost incurred this year P50,000,000 30,000,000 10,000,000 9,000,000 How much income is to be reported this year? P1,000,000 P5,000,000 P6,000,000 P10,000,000
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- At year-end XYZ Company has an in-process construction project with costs totaling $10,000,000. It has billed $8,000,000 on these projects and collected $6,500,000. As it employs the percentage-of-completion method it has also recognized a total of $1,000,000 in profit to date on these contracts. The XYZ balance sheet would report: Selected Answer: Incorrect Asset values totaling $1,500,000 for these projects. Answers: Correct Asset values totaling $4,500,000 for these projects. Asset values totaling $3,500,000 for these projects. Asset values totaling $1,500,000 for these projects. Liabilities values totaling $1,000,000 for these projects.Company A decided to build a road. The duration of the project was 4 years and the fee amounts to € 300,000.1st year the expenses of the company amounted to 30,000 €. A's management estimates that the completion of the project will cost an additional 120,000 and this estimate is considered reliable. Within the same year, an amount of € 60,000 was collected, according to the contract2nd year the costs of the company amounted to € 50,000 and it is reliably predicted that the completion of the project will cost an additional € 110,000. Within the same year, an amount of € 50,000 was collected, according to the contract.3rd year the costs of the company amounted to € 60,000 and it is reliably predicted that the completion of the project will cost an additional € 30,000. Within the same year, an amount of € 50,000 was collected, according to the contract.4th year the company completed the project. The expenses of the 4th year amounted to € 40,000. Within the same year, the entire amount of…ABC Construction Company began work on a contract in 2022 and completed the contract in 2023. The total contact price was P8,500,000. Information related to the construction project are as follows: 2022 2023 Costs incurred during the year P1,200,000 P6,250,000 Estimated costs to complete 4,800,000 - Progress billings during the year 1,450,000 7,050,000 Collections during the year 800,000 6,000,000 How much is the gross profit to be recognized in 2023?
- A project has a first cost of S120,000 and an estimated salvage value of $20,000 at the end of 25 years. Estimated average annual receipts are 527,900. Estimated average annual disbursements for everything except income taxes are 515,060. Estimated average annual disbursements for income taxes are 54,420. Assuming that annual receipts and disbursements will be uniform throughout the 25 years, analyze the above data and compute internal rate of return. Comment whether this project is viable if the Bank offer an interest rate of 8% on loan.Consultant Inc. is a firm of consulting engineers, newly established to advise on a large project taking three years to complete. Their fee for this work is a percentage of the total project costs, payable on completion of the project. In the interim, advances on the final fee are made at six-monthly intervals. The total project costs will not be known until the project is completed. The following advances were received by Consultant Inc. during the three-year period: Year ended 31 December 20x0 K25, 000 Year ended 31 December 20x1 K30, 000 Year ended 31 December 20x2 K30, 000 When the total costs were computed during the year ended 31 December 20x0, it was found that a further sum of K50, 000 was due to Consultant Inc. REQUIRED; Explain how Consultant Inc. would show the payments made during the periods covered by the project. Justify your explanation…The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market life. Capital investment is $1,000,000 Cost of depreciable property which is part of $1,000,000 total estimated project cost is $650,000 Depreciable property is categorized in CCA 30% class with 50% rule applicable. Project analysis period is 3 years Annual operating and maintenance expenses are $636,000 in first year and increase at 5% rate per year Company expects to make $1,250,000 of revenue from sales of new product Salvage value of depreciable property at end of 3 years is $280,000 Corporate taxes are 40% MARR is 15% per year Calculate a 3-year cash flow statement then calculate using excel, Net Present Value of the project IRR
- Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project and the requirements for recognizing revenue over time are met. The total estimated cost of the project is $4,000,000 and the following information is available: ($ in thousands) Year 1 Year 2 Year 3 Costs incurred $ 1,000 $ 1,500 $ 1,250 Estimated completion costs $ 3,000 $ 1,500 $ 0 Billings $ 750 $ 1,750 $ 2,500 Cash collected $ 500 $ 1,500 $ 3,000 Which one of the following entries would be made in Year 1 to record the income recognized assuming that revenue is recognized over time? DR Inventory: Construction in progress $250,000 DR Construction expense $1,000,000 CR Construction revenue $1,250,000Correct DR Inventory: Construction in progress $375,000 CR Billings on construction in progress $375,000Incorrect DR Inventory: Construction in progress $675,000 CR Billings on…Evaluate the following project using PW method. The MARR is set to 12% per year Initial Investment - 13,000 Useful Life - 15 yrs Annual Operating Expenses - 1000 Overhaul cost EOY 5 - 200 Overhaul cost EOY 10 - 550Shanahan Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $609,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $896,000. The following data pertain to the construction period. 2020 2021 2022 Costs to date $266,640 $412,080 $617,000 Estimated costs to complete 339,360 193,9200 –0– Progress billings to date 270,000 545,000 896,000 Cash collected to date 240,000 495,000 896,000 A/ Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. Gross profit recognized in 2020: Gross profit recognized in 2021: Gross profit recognized in 2022: B/ Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. Gross profit recognized in 2020: Gross profit recognized in 2021: Gross…
- A project requires an initial investment in equipment of $99,000 and then requires an initial investment in working capital of $16,000 (at t = 0). You expect the project to produce sales revenue of $135,000 per year for three years. You estimate manufacturing costs at 60 percent of revenues. (Assume all revenues and costs occur at year-end [i.e., t = 1, t = 2, and t = 3]). The equipment depreciates using straight-line depreciation over three years. At the end of the project, the firm can sell the equipment for $13,300 and recover the investment in net working capital. The corporate tax rate is 21 percent and the cost of capital is 15 percent. Calculate the NPV of the project. Multiple Choice $4,985 $13,879 −$3,880 $8,487A quantity of steel in the amount of $423,000.0 is needed for a project, payment due (from contractor to steel fabricator) at the project begin date. The steel is expected to be erected in Month 2 and Month 3, with billing at the end of these months and subsequent payment from the owner (to the contractor) at the end of Month 3 and Month 4. Assume half the the payment occurs at the end of Month 3 and the other half at the end of Month 4. Using an annual interest rate of 18%, which is a monthly interest rate of 1.5%, to finance the purchase with a short-term line of credit loan, determine the total interest accumulated for this steel purchase until payment is received (from the owner) Please do fast .... ASAP .. fast...A quantity of steel in the amount of $423,000.0 is needed for a project, payment due (from contractor to steel fabricator) at the project begin date. The steel is expected to be erected in Month 2 and Month 3, with billing at the end of these months and subsequent payment from the owner (to the contractor) at the end of Month 3 and Month 4. Assume half the the payment occurs at the end of Month 3 and the other half at the end of Month 4. Using an annual interest rate of 18%, which is a monthly interest rate of 1.5%, to finance the purchase with a short-term line of credit loan, determine the total interest accumulated for this steel purchase until payment is received (from the owner).