The Kirby Construction Company was the low bidder on a specialized equipment contract. The contract bid was $5,400,000 with an estimated cost to complete the project of $4,800,000 . The contract period was 34 months , beginning March 1, 2014. The company uses the cost-to-cost method to estimate profits. A record of construction activities for the years 2014– 2017 follows: Actual Cost- Progress Billings Cash Year Current Year Receipts 2014 $2,800,000 $2,600,000 $2.200,000 2015 2,200,000 2,100,000 1,900,000 2016 600,000 700,000 700,000 2017 600,000 The estimated cost to complete the contract at the end of each accounting period is: 2014 $2,200,000 Novt na

The Kirby Construction Company was the low bidder on a specialized equipment contract. The contract bid was $5,400,000 with an estimated cost to complete the project of $4,800,000 . The contract period was 34 months , beginning March 1, 2014. The company uses the cost-to-cost method to estimate profits. A record of construction activities for the years 2014– 2017 follows: Actual Cost- Progress Billings Cash Year Current Year Receipts 2014 $2,800,000 $2,600,000 $2.200,000 2015 2,200,000 2,100,000 1,900,000 2016 600,000 700,000 700,000 2017 600,000 The estimated cost to complete the contract at the end of each accounting period is: 2014 $2,200,000 Novt na

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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DMCI entered into a fixed price contract for the construction of a road for Camella Corp. DMCI determines the stage of completion of construction contracts using the "cost to cost method". The estimated total contract cost is P50 million. The following were the total actual costs incurred by DMCI during the first year of the construction: Cost of negotiating the contract (charge immediately as expense) 500,000 Costs of hiring equipment 700,000 Costs of materials purchased but not yet used in construction 2,500,000 Costs of materials used in construction 15,000,000 Costs of moving plant, equipment and materials to and from the 200,000 contract site Depreciation of equipment used in construction 600,000 Depreciation of idle construction equipment 300,000 Site labor costs 5,000,000 Site supervision costs 1,000,000 How much is the cost incurred to date?
At the beginning of 2009, Florida Road Construction entered into a contract to build a road for the government. Construction will take four years. Th e following information as of 31 December 2009 is available for the contract: Total revenue according to contract $10,000,000 Total expected cost $ 8,000,000 Cost incurred during 2009 $ 1,200,000 Assume that the company estimates percentage complete based on costs incurred as a percentage of total estimated costs. Under the completed contract method, how much revenue will be reported in 2009? A . None.
Use the percentage-completion method and show all calculations and explanation in detail.
Celestial Holdings Co. began constructing a condominium in 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 300,000 ? ? Estimated cost to complete ? ? - Cost incurred 250,00 600,000 112,500 Excess of CIP over PB 25,000 (125,000) How much is the Gross Profit/Loss Realized in 2018? Show your good accounting form. Thank you!
Star Construction Corporation has a contract to construct a building for $10,950,000. The building is controlled by the customer throughout the term of the contract. Total costs to complete the building were originally estimated at $8,850,000. Construction commenced on 4 February 20×5. Actual costs were in line with estimated costs for 20×5 and 20×6. In 20×7, actual costs exceeded estimated costs by $150,000. Total construction costs incurred in each year were as follows: 20X5: $2,700,00020X6: $4,500,00020X7: $1,800,000 Progress billings based on the amount of work completed were collected each year. Star Construction uses the percentage-of-completion method. The percentage-of-completion is based on costs incurred compared with estimated total costs of the project. Company also billed the client and collected the following payments Year Billings Payments Received 20X5: $2,300,000 $2,100,000 20X6: $4,900,000 $4,700,000 20X7: $3,750,000 $4,150,000…
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