ABC Co. entered into a long term construction contract for 3 years. Contract priceagreed was P7,500,000. The following data were ascertained for the contract:Cost incurred for the yearEstimated cost at completion4,700,000O6,250,0005,275,00020205,300,000P1,900,000The outcome of the contract can be estimated reliably.What is the construction cost for the year 2021?5,700,0002021P5,300,000800,0002022P49,500?

Contract accounting is different from normal accounting transactions as a contract may take more…

ABC Co. entered into a long term construction contract for 3 years. Contract price agreed was P7,500,000. The following data were ascertained for the contract: Cost incurred for the year Estimated cost at completion 4,700,000 6,250,000 5,275,000 2020 5,300,000 P1,900,000 The outcome of the contract can be estimated reliably. What is the construction cost for the year 2021? 5,700,000 2021 P5,300,000 800,000 2022 P49,500 ?

ABC Co. entered into a long term construction contract for 3 years. Contract price agreed was P7,500,000. The following data were ascertained for the contract: Cost incurred for the year Estimated cost at completion 4,700,000 6,250,000 5,275,000 2020 5,300,000 P1,900,000 The outcome of the contract can be estimated reliably. What is the construction cost for the year 2021? 5,700,000 2021 P5,300,000 800,000 2022 P49,500 ?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

ABC Co. entered into a long term construction contract for 3 years. Contract price
agreed was P7,500,000. The following data were ascertained for the contract:
Cost incurred for the year
Estimated cost at completion
4,700,000
O6,250,000
5,275,000
2020
5,300,000
P1,900,000
The outcome of the contract can be estimated reliably.
What is the construction cost for the year 2021?
5,700,000
2021
P5,300,000
800,000
2022
P49,500
?

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