The Heart Co. has just completed a 4-year contract to which the following relate: Labor and Materials costs 1,800,000 Machinery Cost Initial Design Costs Disposal proceeds of machinery 50,000 600,000 100,000 According to IFRS 15, What are the total contract cost?
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- Use the following information for the next two questions: Bass Co. appropriately uses the cost-to-cost method in measuring construction contract with a customer. its progress on Information on this contract, which was completed in 20x3, is a shown below: 20x1 20x2 20x3 20,000,000 20,000,000 20,000,000 Transaction price Profit each year Costs incurred each year (200,000) 8,200,000 400,000 1,400,000 3,600,000 (AICPA - Adapted) 1. 10. How much are the contract costs incurred in 20x2? a. 5,800,000 b. 6,200,000 c. 6,600,000 d. 10,200,000 11. How much are the estimated additional costs to complete as of December 31, 20x2? a. 5,400,000 b. 6,800,000 c. 7,200,000 d. 8,600,000Use the following information for the next three questions: In 20x1, Friedland Co. entered into a contract with a customer for the construction of a building. The contract price is a fixed fee of P12,000,000. Information on the contract is shown below: 20x1 20x2 Costs incurred per year Estimated costs to complete 3,920,000 5,080,000 5,880,000 1,000,000UN LOUIS ABC Co. started work on an P8,000,000 fixed-price construction contract in 20x1. Information on the contract is as follows: 20x1 20x2 Costs incurred per year 2,850,000 3,670,000 Estimated costs to complete 4,275,000 1,630,000 How much profit (loss) is recognized in 20x2?
- Eureka Co. started work on a P10M fixed price construction contract in 20x1. The performance obligation in the contract is satisfied overtime. Eureka Co. measures its progress based on professional survey of performance completed to date (i.e., an output method). The estimated total contract costs are P6M. Information on the contract is as follows: 20x1 20x2 Costs incurred per year 2,700,000 1,980,000 Progress on the contract 42% 80% The customer accepted all billings but defaulted in its payment in 20x2. Eureka Co. assessed, on December 31,20x2, that it cannot collect 4% of the total contract price. Requirement: Compute for the revenues, costs of construction and profits recognized in 20x1 and 20x2, repectively.PARAMOUR Co. was contracted by LOVER, Inc. for the construction of a flyover in 20x1. The contract price is P10M. Information on costs is as follows: 20x1 20x2 Total costs incurred to date 1,600,000 6,000,000 Estimated costs to complete 6,400,000 1,500,000 How much revenue is recognized in 20x2? 8M 6M 4M What is the percentage of the progress completed in 20x2? 80% 60% 40% 16%Athena Co. started work on an P8M fixed-price construction contract in 20x1. Information on the contract is as follows: 20x1 20x2 20x3 Costs incurred per year 2,850,000 3,670,000 1,600,000 Estimated costs to complete 4,275,000 1,630,000 - Requirement: Compute for the amounts recognized in profit or loss in 20x1, 20x2, 20x3, respectively.
- How would each of the following costs be classified if units produced is the activity base? a. Salary of factory supervisor ($120,000 per year) b. Straight-line depreciation of plant and equipment c. Property rent of $11,500 per month on plant and equipmentJojo Sdn Bhd ordered from Koko Sdn Bhd a piece of specialised heavy equipment for its operations.Details of cost incurred are:RMPurchase price500,000Import duty12,000Engineer’s fees (for inspection and installation)10,000Shipping and transport costs6,000Site preparation costs:Direct labour costs5,000Concrete reinforcement4,000Maintenance and service contract for 1 year3,000Jojo Sdn Bhd received a trade discount of 10% on list price and 5% cash discount on early settlement.Jojo Sdn Bhd obtained a loan of RM500,000 to finance the purchase. Interest expense on the loan for the year was RM25,000.The equipment has a useful life of 5 years. Jojo Sdn Bhd estimates that dismantling cost to be RM3,500 and legal obligation to restore the site is RM6,500. Both these values are stated in present values.Required:Calculate the initial cost of the plant. Your answer should explain the reasons why some of the costs are not included in the calculation.ABC Co. started work on an P8,000,000 fixed-price construction contract in 20x1. Information on the contract is as follows: 20x1 20x2 Costs incurred per year 2,850,000 3,670,000 Estimated costs to complete 4,275,000 1,630,000 How much profit (loss) is recognized in 20x2?
- On September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a plant's electrical wirings and install a new generator for a total consideration of P10M. The remodeling and the installation single performance obligation treated as a satisfied over time. The expected contract costs Generator are LOU an as follows: 2,500,000 4,000,000 6,500,000 SALL Other costs Expected total contract costs VERSITY Additional information: • ABC Co. uses the cost-to-cost method in measuring its progress towards the complete satisfaction of the performance obligation. • ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator. • The customer obtains control of the generator when it is delivered to the site in December 20x1. However, the generator will not be installed until March 20x2. • ABC Co. regards the cost of the generator as significant in relation to the expected total contract costs-eating during examinations, quizzes or plagiarism in connection •…On September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a plant's electrical wirings and install a new generator for a total consideration of P10M. The remodeling and the installation single performance obligation treated as a satisfied over time. The expected contract costs Generator LO as follows: Other costs Expected total contract costs 2,500,000 4,000,000 6,500,000 VERSITY Additional information: • ABC Co. uses the cost-to-cost method in measuring its progress towards the complete satisfaction of the performance obligation. • ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator. The customer obtains control of the generator when it is delivered to the site in December 20x1. However, the generator will not be installed until March 20x2. • • ABC Co. regards the cost of the generator as significant in relation to the expected total contract costs-eating during examinations, quizzes or plagiarism in connection . Although ABC Co.…Required: Calculate the following: a. estimated total cost of completion, b. estimated profit on completion, c. estimated profit to date. Lim Construction is building Univ tower Near Unicity, Sibu. The date of commencement of construction is 1 January 2021 and the date of completion is on 31 December 2026. During the year ending 31 December 2021, the following information reported: RM Contract price Plant sent to site Purchasing of materials Wages paid Direct expenses Overhead incurred 13,000,000.00 2,000,000.00 3,000,000.00 1,500,000.00 1,000,000.00 500,000.00 At the end of December 2021, the following available: 1. Material unused on site amounted RM1,000,000.00 2. Wages owing RM500,000.00 3. Value of work certified RM6,000,000.00 4. Cost of work done but not yet certified amounted to RM500,000.00 5. Plant at site RM1,500,000.00
