Ryan McGuireSuppose that on 01-Feb-2024, a financial manager takes a long position in 200 Oil Future contracts that expire in June-2024 at a future price of$95.00 per barrel. Each Oil Future contract calls for the delivery of 1,000 barrels. The initial Margin and Maintenance margins are 12% and 5% ofthe initial face value of the contract, respectively, based on the number of contracts, the number of underlying assets per contract, and the futureprice on the settlement date (200 x 1,000 x $95.00).The manager holds the contract for 10 business days and needs to calculate their margin account balance for each day based on the provided dailyprices for the respective Oil Future contract per barrel. Additionally, determine whether a Margin Call has occurred and, if so, calculate the valuethat the manager needs to deposit.Initial MarginMaintenance MarginDayContract OpeningD+1D+2D+4D+5D+6D+7D+8D+9D+10Future Price/ perUnderlying Asset$$$$$$$$$$95.0094.0094.0093.0092.0091.0088.0088.5090.0092.00Change in Price-1.00Total Gain/Loss-1.00What is the profit or loss of the manager's future contract position in Oil?Margin Acc.BalanceMargin Call? Yesor NoAmount to bedeposited.

Initial Margin Requirement: Initial Margin = Number of Contracts * Number of Barrels per Contract *…

Answered: D-2024, a financial manag Oil Future…

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 26E

See similar textbooks

Similar questions

Suppose that a contract is started on January 1, 2018, with an estimated completion date of December 31, 2019. The final contract price is P1,500,000. In the first year covering January 1 to December 31, 2018: Cost incurred amounted to P600,000. Half the work on the contract was completed. Certificates of work completed have been issued to the value of P750,000. It is estimated with reasonable certainty that further costs to completion in 2019 will be P600,000. Requirements: 1. The contract is certified at what percentage of completion? 2. At Dec 31, 2018, the entity will recognize how much profit? 3. At Dec 31, 2018, the entity will recognize how much contract asset?
How much is the contract revenue to date in the year 2019? Double Dragon receives a contract to build a building over a period of 3 years for a price of P14,000,000. Information relating to the performance of the contract is summarized as follows: 2019 Construction Costs incurred- yearly 3,000,000 4,840,000 3,360,000 2017 2018 Estimated Costs to Complete 7,000,000 3,360,000 Billings during the year 2,400,000 5,200,000 6,400,000 Collections during the year 2,000,000 5,400,000 6,600,000
How much is the Gross Profit/Loss Realized in 2018? Celestial Holdings Co. began constructing a condominium on January 1, 2017 for a contract price of P1,250,000. The entity has assured collection of its contract and the costs can be reliably estimated. For the year ended December 31, 2018, Celestial billed its client an additional 60% of the contract price. Data relating to the construction are as follows: 2017 2018 2019 Construction in Progress Estimated Cost to Complete 300,000 Cost Incurred 250,000 600,000 112,500 Excess of CIP over PB 25,000 (125,000)
In January 2018, Continental Fund Services, Inc., enters into a one-year contract with a client to provide investment advisory services. The company will receive a management fee, prepaid at the beginning of the contract,that is calculated as 1% of the client’s $150 million total assets being managed. In addition, the contract specifiesthat Continental will receive a performance bonus of 20% of any returns in excess of the return on the Dow JonesIndustrial Average market index. Continental estimates that it will earn a $2 million performance bonus, but isvery uncertain of that estimate, given that the bonus depends on a highly volatile stock market. On what transaction price should Continental base revenue recognition?
Oriole Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $2050000 each quarter. The total contract price is $18222000 and Oriole estimates total costs of $17100000. Oriole estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2021, Oriole estimates that it is 20% complete with the construction, based on costs incurred.At December 31, 2022, Oriole Construction estimates that it is 70% complete with the building; however, the estimate of total costs to be incurred has risen to $17300000 due to unanticipated price increases. What is the total amount of Construction Expenses that Oriole will recognize for the year ended December 31, 2022? $8690000 $8325600 $12110000 $8465600
The Naples Company uses the percentage-of-completion method and the cost-to-cost method for its long-term construction contracts. On one such contract, Naples expects total revenues of P260,000. During the first year, Naples incurred costs pf P50,000 and billed the customer P30,000 under the contract. At what net amount should Naples Construction in Progress for this contract be reported at the end of the first year? a. P 35,000 b. 65,000
In January 2024, Continental Fund Services, Incorporated, enters into a one-year contract with a client to provide investment advisory services. The company will receive a management fee, prepaid at the beginning of the contract, that is calculated as 1.5% of the client's $310 million total assets being managed. In addition, the contract specifies that Continental will receive a performance bonus of 15% of any returns in excess of the return on the Dow Jones Industrial Average market index. Continental estimates that it will earn a $1.5 million performance bonus, but is very uncertain of that estimate, given that the bonus depends on a highly volatile stock market. On what transaction price should Continental base revenue recognition? Note: Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50). Transaction price million
Sheridan Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1200000 each quarter. The total contract price is $18222000 and Sheridan estimates total costs of $17400000. Sheridan estimates that the building will take 3 years to complete, and commences construction on January 2, 2021.At December 31, 2021, Sheridan estimates that it is 20% complete with the construction, based on costs incurred. What is the total amount of Revenue from Long-Term Contracts recognized for 2021 and what is the balance in the Accounts Receivable account assuming Cannon Company has not yet made its last quarterly payment? Revenue Accounts Receivable $3480000 $1200000 $6074000 $6074000 $3480000 $6074000 $3644400 $1200000
Blossom Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1450000 each quarter. The total contract price is $18492000 and Blossom estimates total costs of $17650000. Blossom estimates that the building will take 3 years to complete, and commences construction on January 2, 2018. At December 31, 2018, Blossom estimates that it is 30% complete with the construction, based on costs incurred. What is the total amount of Revenue from Long- Term Contracts recognized for 2018 and what is the balance in the Accounts Receivable account assuming Cannon Company has not yet made its last quarterly payment? Revenue $6164000 $5547600 $5295000 $5295000 O Option A Option B O Option C Accounts Receivable $6164000 $1450000 $1450000 $6164000
A construction company is constructing an office building under contract for Codwell Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1,550,000 each quarter. The total contract price is $18,600,000 and the construction company estimates total costs of $17,750,000. They also estimate that the building will take 3 years to complete, and commences construction on January 2, 2021.At December 31, 2021, the construction company estimates that it is 30% complete with the construction, based on costs incurred. What is the total amount of Revenue from Long-Term Contracts recognized for 2021 and what is the balance in the Accounts Receivable account assuming Codwell Company has not yet made its last quarterly payment? Revenue Accounts Receivable Question 2 options: a $6,200,000 $6,200,000 b $5,325,000 $1,550,000 c $5,580,000 $1,550,000 d $5,325,000…
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 D C B A
SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2017 December 31, 2018Percentage of completion 30% 82.5%Estimated cost to complete 1,960,000 840,000 What is the construction cost of sales for year 2018?A. 3,960,000 C. 3,233,750B. 3,120,000 D. 4,478,750

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

D-2024, a financial manag Oil Future contract calls E the contract, respectivel- date (200 x 1,000 x $95.0 contract for 10 business e Oil Future contract per