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    LTCC Consultation

    Uploaded by

    Mark Gelo Winchester
    The document provides information about three construction projects, including contract prices, costs incurred over multiple years, percentage of completion, and requests to calculate revenue, costs of sales, and gross profit under different accounting methods. For the first project, it asks to calculate revenue in 2021 under the percentage of completion method and construction in progress in 2021 under the cost recovery method. For the second project, it provides data from 2021-2023 and asks to calculate the costs of sales in 2023. For the third project, it provides data from 2021-2022 and asks to calculate the total estimated gross profit by the end of 2022.

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    LTCC Consultation

    Uploaded by

    Mark Gelo Winchester
    237 views2 pages
    The document provides information about three construction projects, including contract prices, costs incurred over multiple years, percentage of completion, and requests to calculate revenue, costs of sales, and gross profit under different accounting methods. For the first project, it asks to calculate revenue in 2021 under the percentage of completion method and construction in progress in 2021 under the cost recovery method. For the second project, it provides data from 2021-2023 and asks to calculate the costs of sales in 2023. For the third project, it provides data from 2021-2022 and asks to calculate the total estimated gross profit by the end of 2022.

    Original Description:

    wala

    Original Title

    LTCC-CONSULTATION

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    The document provides information about three construction projects, including contract prices, costs incurred over multiple years, percentage of completion, and requests to calculate revenue, costs of sales, and gross profit under different accounting methods. For the first project, it asks to calculate revenue in 2021 under the percentage of completion method and construction in progress in 2021 under the cost recovery method. For the second project, it provides data from 2021-2023 and asks to calculate the costs of sales in 2023. For the third project, it provides data from 2021-2022 and asks to calculate the total estimated gross profit by the end of 2022.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    237 views2 pages

    LTCC Consultation

    Uploaded by

    Mark Gelo Winchester
    The document provides information about three construction projects, including contract prices, costs incurred over multiple years, percentage of completion, and requests to calculate revenue, costs of sales, and gross profit under different accounting methods. For the first project, it asks to calculate revenue in 2021 under the percentage of completion method and construction in progress in 2021 under the cost recovery method. For the second project, it provides data from 2021-2023 and asks to calculate the costs of sales in 2023. For the third project, it provides data from 2021-2022 and asks to calculate the total estimated gross profit by the end of 2022.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Problem 1: On January 1, 2020, an entity entered into a long-term construction contract

    with fixed contract price of P5,000,000. The entity billed its client as follows: 30% during
    2020, 40% during 2021 and the remainder at the year of project completion. The
    following data were provided by the cost accountant of the entity:

    2020 2021 2022

    Cumulative Cost incurred as of the end of


    P2,200,000 P3,600,000 P4,800,000
    the year
    Estimated remaining cost to complete at
    P3,300,000 P900,000 -
    the end of the year

    Req. 1: How much is the construction cost to be recorded in the financial statements for
    the year 2021 under percentage of completion method?

    Req. 2: How much is the construction in progress on December 31, 2021 under cost
    recovery method?

    Problem 2: On January 1, 2021, Entity A accepted a long-term construction project to


    construct a building with an initial contract price of P10,000,000. The outcome of the
    construction project can be estimated reliably and the contractor decided to employ cost
    to cost method. During 2023, the contract price increases due to the change in the
    project design requested by the client. The following data are provided by the
    accountant and project manager concerning the construction costs for the three years of
    construction:

    Year 12/31/2021 12/31/2022 12/31/2023

    Cumulative costs incurred as of the end of


    P1,000,000 ? P10,800,000
    the year
    Realized gross profit/(loss) during the
    ? P350,000 (P1,600,000)
    year
    Percentage of completion as of the end of
    12.5% 60% 90%
    the year

    What is the Construction cost of sales to be recognized in the Income Statement for
    the year ended December 31, 2023?

    a. 5,400,000
    b. 4,600,000
    c. 4,800,000
    d. 5,500,000
    Problem 3: Cheng Corp has used the cost to cost method of computing the percentage
    of completion to recognize revenue. Total contract price was P2,000,000. The project
    will take three years to complete. The following data are available from 2021 to 2023:

    2021 2022 2023


    Realized gross profit (loss),
    current year 40,000 140,000 (20,000)
    Cost incurred each year 360,000 ? 820,000

    How much is the total estimated gross profit on the project by the end of 2022?
    a. P233,333.40 c. P450,000
    b. P350,000 d. P300,000

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