SMDC Construction is constructing an office building under contract for Onyx Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of P1,550,000 each quarter. The total contract price is P18,600,000 and SMDC Construction estimates total costs of P17,750,000. SMDC Construction estimates that the building will take 3 years to complete, and commences construction on January 2, 2018. SMDC Construction completes the remaining 25% of the building construction on December 31, 2020, as scheduled.At that time the total costs of construction are P18,750,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that SMDC Construction will recognize for the year ended December 31, 2020? Revenue ExpensesA. P18,600,000 P18,750,000B. P4,650,000 P 4,687,500C. P4,650,000 P 5,250,000D. P4,687,500 P 4,687,500Group of answer choicesDCBA

Answered: What is the total amount of Revenue…

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 10C

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SMDC Construction is constructing an office building under contract for Onyx Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of P1,550,000 each quarter. The total contract price is P18,600,000 and SMDC Construction estimates total costs of P17,750,000. SMDC Construction estimates that the building will take 3 years to complete, and commences construction on January 2, 2018.

SMDC Construction completes the remaining 25% of the building construction on December 31, 2020, as

scheduled.

At that time the total costs of construction are P18,750,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that SMDC Construction will recognize for the year ended December 31, 2020?

Revenue Expenses

A. P18,600,000 P18,750,000

B. P4,650,000 P 4,687,500

C. P4,650,000 P 5,250,000

D. P4,687,500 P 4,687,500

Group of answer choices

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