On January 1, 2018, Liquid Company accepted a long-term construction project for an initialcontract price ofP2,000,000 to be completed on June 30, 2020. On January 1, 2019, the contractprice was increased toP3,000,000 by reason of change in the design of the project. The outcomeof the construction contract can be estimated reliably. The project was completed on December31, 2020 which resulted to penalty amounting toP400,000. The entity provided the following dataconcerning the direct costs related to the said project for 2018and 2019:20182019Costs during the year880,0001,360,000Remaining estimated costs to complete at year-end1,320,000560,000What is the construction revenue for the year ended December 31, 2018?

On January 1, 2018, Liquid Company accepted a long-term construction project for an ini contract price ofP2,000,000 to be completed on June 30, 2020. On January 1, 2019, the contr. price was increased toP3,000,000 by reason of change in the design of the project. The outcor of the construction contract can be estimated reliably. The project was completed on Decemb 31, 2020 which resulted to penalty amounting toP400,000. The entity provided the following da concerning the direct costs related to the said project for 2018and 2019: 2018 2019 Costs during the year 880,000 1,360,000 Remaining estimated costs to complete at year-end 1,320,000 560,000

On January 1, 2018, Liquid Company accepted a long-term construction project for an ini contract price ofP2,000,000 to be completed on June 30, 2020. On January 1, 2019, the contr. price was increased toP3,000,000 by reason of change in the design of the project. The outcor of the construction contract can be estimated reliably. The project was completed on Decemb 31, 2020 which resulted to penalty amounting toP400,000. The entity provided the following da concerning the direct costs related to the said project for 2018and 2019: 2018 2019 Costs during the year 880,000 1,360,000 Remaining estimated costs to complete at year-end 1,320,000 560,000

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

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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?
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