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A contractor failing to complete his contract worth P700,000 in a specified time is
compelled to pay the penalty of ½ of 1% per day for the first 6 days of the extra time
required, and for each additional day thereafter, the stipulated penalty is increased by
10% each day. If he pays a total penalty of P61,600 by how many days did he
overrun his contract time?
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Solved in 2 steps
- You were delayed for 13 days from date of delivery time. A standard liquidated damages (LD) is imposed on you. Compute how much are you going to receive in your final billing if your contract amount is Php 3.5 million.At the end of one day a clearing house member is long 50 contracts, and the settlement price is $10,000 per contract. The original margin is $500 per contract. On the following day the member becomes responsible for clearing an additional 10 long contracts, entered into at a price of $9,800 per contract. The settlement price at the end of this day is still $9,800. How much does the member have to add to its margin account with the exchange clearing house? $0 $5,000 $10,000 $15,000One of Rose’s suppliers, Powder Bhd, had adverse publicity due to the issue of cleanliness of its factory. On 1 September 2019, Rose Bhd decided to terminate the contract with Powder Bhd. The contract will expire in 8 months time. According to the contract, the cost to fulfill the contract is RM160,000 per month. It is also stipulated in the contract that Powder Bhd can accept a compensation of RM1,400,000 if the contract is terminated more than 6 months before it expires. Required:For each of the events above, explain whether provisions should be recognised in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets.
- On July 1, 2017, Dinar obtained a contract to construct a building. The building was estimated to be built at a total cost of P15,000,000 and is scheduled for completion on October 2019. The contract contains a penalty clause to the effect that the other party was to deduct P35,000 from the contract price for each week of delay. On the other hand, if the contractor was able to finish the building earlier than agreed, it will be rewarded an amount equal to P50,000 for every month of early completion. Furthermore, cost escalation clause was included in the contract. In 2018, the estimated costs of particular construction material amounting to P520,000 were bought for P780,000. The increase in the contract price related to this cost escalation was approved by the client. Completion was delayed for 4 weeks. The records show: 2017 2018 2019 Costs incurred P1,750,000 6,440,000 1,085,000 Estimated cost to complete 7,000,000 1,810,000 -- Progress billings…The Naples Company uses the overtime/percentage-of-completion method and the point in- time/cost-to-cost method for its long-term construction contracts. On one such contract, Naples expects total revenues of P260,000 and total costs of P200,000. During the first year, Naples incurred costs of 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. P30,000 b.P35,000 c.P50,000 d.P65,000Careful Company sells goods that cost P600,000 to a customer for P800,000 on December 20, 2021. The sales price includes an installation fee, which is valued at P80,000. The fair value of the goods is P740,000. The installation is considered a separate performance obligation and is expected to take 3 months to complete. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021 and 2022?
- Beautiful Company sold a set of washing machine and a dryer for a total contract price of P100,000 on December 15, 2021. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. The washing machine was delivered on December 20, 2021 but the dryer was delivered only on January 5, 2022. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021? *How much is the revenue to be recognized in 2022?We have given the contract to an agency for the value of 17 Cr for the duration of 7 month with the LD clause of 0.5% of total contract price for each week's delay or part thereof, subject to maximum of 5% of total contract price. But agency has completed only 9 Cr in 10 month duration and closed the work, in this case how will calculate the LD amount?In a construction contract assigned to a contractor, according to the table shown below. The contractor's estimates for the price submitted by him included a profit guarantee of 20% of the total cost of the work. The terms of the contract between the two parties included that the client would credit the contractor with an advance payment of 10% of the contracted amount deducted in the form of two sequential monthly re-payments. The first re-payment should be deducted from the amount of the fourth monthly payment that the contractor is actually entitled to receive where the first re-payments amount is equivalent to 75% and the second 25% of the advance payment amount, respectively. The work has to be done in accordance with the general contracting conditions in Iraq. Note that the procedures of organizing, auditing and paying of the monthly payments takes one month between the due date and the date of actual receipt of the amount by the contractor.
- On July 1, 20x1, Zevrek Co. enters into contract with a customer for the construction of a building. The contract price is P6M. However, Zevrek Co. is entitled to a bonus of P500,000 if the building is completed within 3 years. Zevrek Co. uses the cost-to-cost method in measuring its progress on the contract. At contract inception, Zevrek Co. estimates total contract costs of P4M. In 20x1, Zevrek Co. incurs total costs of P1,350,000. Due to bad weather conditions, Zevrek Co. does not expect that it can finish the building on time for it to be entitled to the bonus. The estimated costs to complete as of the end of 20x1 are P2.4M. In 20x2, Zevrek Co. incurs total costs of P2,260,000. Due to improvements in weather conditions, Zevrek Co. now believes that it is highly probable that the building will be finished on time and the bonus will be received. The estimated costs to complete as of the end of 20x2 are P190,000. Requirement: Compute for the revenues, costs of construction and…Sweet Corp. enters into a contract with a customer to build an apartment building for $1,037,600. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $155,400 to be paid if the building is ready for rental beginning August 1, 2021. The bonus is reduced by $51,800 each week that completion is delayed. Sweet commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability August 1, 2021 70 % August 8, 2021 20 August 15, 2021 4 After August 15, 2021 6 Determine the transaction price for this contract.Teal Corp. enters into a contract with a customer to build an apartment building for $1,031,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $144,300 to be paid if the building is ready for rental beginning August 1, 2021. The bonus is reduced by $48,100 each week that completion is delayed. Teal commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability August 1, 2021 70 % August 8, 2021 20 August 15, 2021 4 After August 15, 2021 6 (a) Determine the transaction price for the contract, assuming Teal is only able to estimate whether the building can be completed by August 1, 2021, or not (Teal estimates that there is a 70% chance that the building will be completed by August 1, 2021). (If answer is 0, please enter 0. Do not leave any fields blank.) Transaction Price $enter the…
