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What is the excess of construction in progress over progress billings on December 31, 2020 under percentage of completion method, cost-to-cost approach? a. 500,000 b. 200,000 c. 300,000 d. 400,000

What is the excess of construction in progress over progress billings on December 31, 2020 under percentage of completion method, cost-to-cost approach? a. 500,000 b. 200,000 c. 300,000 d. 400,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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2. On January 1, 2020, an entity entered into a long-term construction contract with fixed contract price of P5,000,000. The entity billed its client as follows: 30% during 2020, 40% during 2021 and the remainder at the year of project completion. The following data were provided by the cost accountant of the entity: 2020 2021 2022 Cumulative Cost incurred as of the end of the year P2,200,000 P3,600,000 P4,800,000 Estimated remaining cost to complete at the end of the P3,300,000 P900,000 year 1. What is the excess of construction in progress over progress billings on December 31, 2020 under percentage of completion method, cost-to-cost approach? a. 500,000 b. 200,000 c. 300,000 d. 400,000 2. What is the excess of construction in progress over progress billings on December 31, 2021 under cost recovery method? a. 100,000 b. 500,000 c. 300,000 d. 400,000 3. Assume that an architect hired by the company made the following estimates of the project's percentage of completion at 50%, 90% and 100% at the end of 2020,2021, and 2022, respectively, what is the realized gross profit for 2021, using percentage of completion method – output measures as determined by estimates made by the architect? 900,000 600,000 c. (300,000) d. а. b. 450,000
Transcribed Image Text:2. On January 1, 2020, an entity entered into a long-term construction contract with fixed contract price of P5,000,000. The entity billed its client as follows: 30% during 2020, 40% during 2021 and the remainder at the year of project completion. The following data were provided by the cost accountant of the entity: 2020 2021 2022 Cumulative Cost incurred as of the end of the year P2,200,000 P3,600,000 P4,800,000 Estimated remaining cost to complete at the end of the P3,300,000 P900,000 year 1. What is the excess of construction in progress over progress billings on December 31, 2020 under percentage of completion method, cost-to-cost approach? a. 500,000 b. 200,000 c. 300,000 d. 400,000 2. What is the excess of construction in progress over progress billings on December 31, 2021 under cost recovery method? a. 100,000 b. 500,000 c. 300,000 d. 400,000 3. Assume that an architect hired by the company made the following estimates of the project's percentage of completion at 50%, 90% and 100% at the end of 2020,2021, and 2022, respectively, what is the realized gross profit for 2021, using percentage of completion method – output measures as determined by estimates made by the architect? 900,000 600,000 c. (300,000) d. а. b. 450,000
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