The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows: 2017 2018 2019 Actual cost incurred to date P6,562,500 10,968,750 116,250,000 Esimated cost to complete 4,375,000 1,218,750 - Progress billings 3,000,000 12,000,000 13,125,000 Cash receipts during the year 5,625,000 3,750,000 3,750,000 (Cost Recovery) How much is the realized gross profit in 2017, 2018 and 2019? a. 656,250; (468,750); 1,312,500 b. 0; 0; 1,500,000 c. 1,312,500; 468,750; 656,250 d. 1,312,500; (468,750); 656,250
The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows: 2017 2018 2019 Actual cost incurred to date P6,562,500 10,968,750 116,250,000 Esimated cost to complete 4,375,000 1,218,750 - Progress billings 3,000,000 12,000,000 13,125,000 Cash receipts during the year 5,625,000 3,750,000 3,750,000 (Cost Recovery) How much is the realized gross profit in 2017, 2018 and 2019? a. 656,250; (468,750); 1,312,500 b. 0; 0; 1,500,000 c. 1,312,500; 468,750; 656,250 d. 1,312,500; (468,750); 656,250
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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The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows:
|
2017 |
2018 |
2019 |
Actual cost incurred to date |
P6,562,500 |
10,968,750 |
116,250,000 |
Esimated cost to complete |
4,375,000 |
1,218,750 |
- |
Progress billings |
3,000,000 |
12,000,000 |
13,125,000 |
Cash receipts during the year |
5,625,000 |
3,750,000 |
3,750,000 |
(Cost Recovery) How much is the realized gross profit in 2017, 2018 and 2019?
a. 656,250; (468,750); 1,312,500
b. 0; 0; 1,500,000
c. 1,312,500; 468,750; 656,250
d. 1,312,500; (468,750); 656,250
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