On January 1, 2021, Citimart Company was granted by a local government authority 5,000 hectares of land located near the slums outside the city limits. The condition attached to this grant was that the entity shall clean up this land and lay roads by employing laborers from the village where the land is located. The government has fixed the minimum wage payable to the workers. The entire operation will take 3 years and is estimated to cost P10,000,000. This amount will be spent P2,000,000 for 2021, P2,000,000 for 2022, and P6,000,000 for 2023. The fair value of this land is P12,000,000. Required: Prepare journal entries for the current year in connection with the grant.
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- 21. For more than a decade since its incorporation, Feb-Ibig Company had been renting its office space. The Company President thought of constructing their own building for P40,000,000 which they plan to start and finish until December 31, 2021. Feb-Ibig made the following payments, based on the construction contract, during 2021.· January 31- P5,000,000· February 28- P8,000,000· July 1- P15,000,000· August 31- P10,000,000· November 30- P2,000,000Feb-Ibig secured a 10%, 4-year noted dated January 1, 2021, specifically intended for the construction. The amount was P20,000,000.Also, the entity had other debts outstanding as follows:· 8%, 6-year note dated December 31, 2019- P18,000,000· 12%, 7-year noted dated December 31, 2018 - P22,000,000 What is the total cost of the building constructed?Assume the following scenarios.Scenario 1: During 2021, The Hubbard Group provides services of $900,000 for repair of a state highway. The company receives an initial payment of $300,000 with the balance to be received the following year.Scenario 2: Rolling Stone magazine typically charges $80 for a one-year subscription. On January 1, 2021, Herman, age 72, purchases a one-year subscription to the magazine and receives a 15% senior citizen discount.Scenario 3: During 2021, Waste Management provides services on account for $30,000. The customer pays for those services in 2022.Scenario 4: During 2021, Sysco Corporation sells grocery items to one of its customers for $260,000 on account. Cash collections on those sales are $180,000 in 2021 and $60,000 in 2022. The remaining $20,000 is written off as uncollectible in 2022.Required: For each scenario, calculate the amount of revenue to be recognized in 2021.On January 1, 2018 The Village of Port Jefferson engaged to Frog Construction company to construct amunicipal office complex. The three-year a to receive 10 million in cash payments from the city in threeinstallments: 25% when the project was 30% complete; 25% when the project was 60% complete; and50%when the project was fully complete. The contract required that Frog's completion estimates be certifiedby an independent consultant before payments were made.During the first year of the contract, Frog completed 30% of the contract and incurred costs of 2,490,000.During the second year, the project was certified as being 60% complete and Frog incurred costs of3,100,000.During the third year, Frog completed the project and incurred costs of 3,110,000.Assuming Frog had no other revenues or expenses, determine the profit on construction for 2018, 2019,and 2020 under the following methods: A. Percentage Calculation B. Completed Contract
- 6) In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,100,000 $ 2,450,000 $ 2,695,000 Estimated costs to complete as of year-end 4,900,000 2,450,000 0 Billings during the year 2,200,000 2,350,000 5,450,000 Cash collections during the year 1,900,000 2,300,000 5,800,000 Westgate recognizes revenue over time according to percentage of completion. 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 2022 2023 Costs incurred…7) In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 3,344,000 $ 3,960,000 $ 1,645,600 Estimated costs to complete as of year-end 5,456,000 1,496,000 0 Billings during the year 2,800,000 4,504,000 2,696,000 Cash collections during the year 2,600,000 4,400,000 3,000,000 Assume that Westgate Construction’s contract with Santa Clara County does not qualify for revenue recognition over time.Required:1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.2-a. In the journal below, complete the necessary journal entries for the year 2021 (credit "Various accounts" for construction costs incurred).2-b. In the journal below, complete the necessary journal…25. Balance Corporation borrowed P10,000,000 at 12% to finance in part the construction of a new office building on January 1, 2021 and in part for general purposes. The loan is to be repaid commencing the month following completion of the building.Expenditures for the completed structure totaled P8,000,000 during the year ended December 31, 2021. These expenditures were incurred evenly throughout the year. The entity earned interest of P80,000 for the year on the unexpended portion of the loan.What amount of interest is capitalized on December 31, 2021?Group of answer choices580,000480,000960,0001,200,000
- Rainy August Afternoon Co. (RAA) enters into a service concession arrangement whereby RAA undertakes to build a public infrastructure, operate that infrastructure over a specified period, and thereafter transfer it to the government (the grantor). In addition, RAA is obligated to recondition the infrastructure a year before it is handed over to the government. This is regardless of the infrastructure’s condition and level of usage. In return, the government promises to pay RAA a fixed amount of cash plus interest in each year during the operation period. During the construction period, RAA recognizes an asset that is reported in the financial statements as contract asset. receivable (a financial asset). intangible asset. property, plant and equipment.Rainy August Afternoon Co. (RAA) enters into a service concession arrangement whereby RAA undertakes to build a public infrastructure, operate that infrastructure over a specified period, and thereafter transfer it to the government (the grantor). In addition, RAA is obligated to recondition the infrastructure a year before it is handed over to the government. This is regardless of the infrastructure’s condition and level of usage. In return, the government promises to pay RAA a fixed amount of cash plus interest in each year during the operation period. During the construction period, RAA recognizes an asset that is reported in the financial statements as a. contract asset. b. receivable (a financial asset). c. intangible asset. d. property, plant and equipment. If the promise to grant a license is distinct and that the license provides the customer the “right to access” the entity’s intellectual property, how is revenue recognized from the initial fee in the contract? a. in full…On january 2 2021 brand company received a grant of P60,000,000 to compensate it for costs it incurred i planting trees over a period of five years. Brand company will incur such cost in this manner: 2021 2,000,000 2022 4,000,000 2023 6,000,000 2024 8,000,000 2025 10,000,000 actual costs incurred in the planting trees showed 2,000,000 and 4,000,000 in years 2021 and 2022, respectively. However in 2023 and 2024 the company has stopped planting trees. Due to the non fulfillment of its obligation, the government is demanding an immediate repayment of the grant in the amount of 50,000,000 which is considered reasonable. What is the grant income for the year 2021?
- 42. ABC, Inc. works on a P5,250,000 contract in 2022 to construct an office building. During 2022, ABC, Inc. uses the cost to cost method. At December 31, 2022, the balances in certain accounts were: Construction in progress – P1,890,000; accounts receivable – P180,000; and billings on construction in process – P900,000; contract retention – P90,000; mobilization fee – P70,000. At December 31,2022, the estimated costs to completion are P2,352,000. How much is the realized gross profit in 2022?2) In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,100,000 $ 2,450,000 $ 2,695,000 Estimated costs to complete as of year-end 4,900,000 2,450,000 0 Billings during the year 2,200,000 2,350,000 5,450,000 Cash collections during the year 1,900,000 2,300,000 5,800,000 Westgate recognizes revenue over time according to percentage of completion. Required:1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)4.) Armstrong County established a County Office Building Construction Fund to account for a project expected to take less than one year to complete. The County's fiscal year ends on June 30. On July 1, 2023, bonds were sold at par in the amount of $7,500,000 for the project. On July 5, a contract was signed with the Sellers Construction Company in the amount of $7,390,000. On December 30, a progress bill was received from Sellers in the amount of $5,000,000. The bill was paid, except for the 5 percent retained upon final inspection. On June 1, a final bill was received in the amount of $2,390,000 from Sellers, which was paid, except for the 5 percent retained. An appointment was made between the county engineer and Bill Sellers to inspect the building and to develop a list of items that needed to be corrected. On the day of the meeting, the county engineer discovered that Sellers had filed for bankruptcy and moved out of the state. The City incurred a liability in the amount of…