Last year, Stone Builders, Inc. started work on a P10,600,000 construction contract which was completed this year. It has consistently used the percentage of completion method of recognizing income. Accounting data provided last year were as follows: Debit: Progress Billings P4,300,000; Credits: Cost incurred 3,450,000 Collections 3,900,000 Estimated cost to complete 3,630,000 What amount of this contract was recognized last year?

Managerial Accounting: The Cornerstone of Business Decision-Making
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ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
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Last year, Stone Builders, Inc. started work on a P10,600,000 construction contract which was completed this year. It has consistently used the percentage of completion method of recognizing income. Accounting data provided last year were as follows: Debit: Progress Billings P4,300,000; Credits: Cost incurred 3,450,000 Collections 3,900,000 Estimated cost to complete 3,630,000 What amount of this contract was recognized last year?

 

Brave Corporation authorized Heart on January 1, 2010 to operate as a franchisee for an initial franchise fee of P2,500,000. Of this amount, P1,500,000 was received upon signing of the contract and the balance is due in two equal annual payments beginning January 1, 2011. The contract provides that the nonrefundable downpayment represents fair measure of the services already performed, however, substantial performance is still required of Brave. Collectibility of the note is reasonably certain. If the present value of the two annual payments is P895,000, what amount of unearned franchise fees from Heart should Brave report on December 31, 2010? 

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