Use the following information for the next three questions:In 20x1, Friedland Co. entered into a contract with a customer forthe construction of a building. The contract price is a fixed fee ofP12,000,000. Information on the contract is shown below:20x120x2Costs incurred per yearEstimated costs to complete3,920,0005,080,0005,880,0001,000,000 The performance obligation is satisfied over time. However,Friedland Co. cannot reasonably measure the outcome of theperformance obligation but expects to recover all contractcosts incurred. How much are the gross profit, revenue andcost of construction recognized in 20x2, respectively?Gross profitneteCost of construction0.Revenue0a. 00.b. 03,920,0003,920,000с. 05,080,0005,080,000d. (420,000)0.ontract in

Solution Concept When the outcome of the project can not be reliably measured , the treatment shall…

Answered: cost of construction recognized in…

cost of construction recognized in 20x2, respectively? Gross profit Cost of construction 0. 3,920,000 Revenue a. 0 b. 0 3,920,000 5,080,000 С. 0 5,080,000 d. (420,000) 0. 0.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The performance obligation is satisfied over time. However,
Friedland Co. cannot reasonably measure the outcome of the
performance obligation but expects to recover all contract
costs incurred. How much are the gross profit, revenue and
cost of construction recognized in 20x2, respectively?
Gross profit
ne
te
Cost of construction
0.
Revenue
0
a. 0
0.
b. 0
3,920,000
3,920,000
с. 0
5,080,000
5,080,000
d. (420,000)
0.
ontract in

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