advanced accounting chapter 10
Long-Term Construction Contracts 163
CHAPTER 10
MULTIPLE CHOICE ANSWERS AND SOLUTIONS
10-1: a Percentage of Completion Method: Contract Price P1,000,000 Less: Total estimated cost Cost incurred P 200,000 Estimated remaining cost _400,000 __600,000 Gross profit estimated 400,000 % of completion (200,000/600,000) __33 1/3% Gross profit to be recognized P 133,333
Zero Profit Method: 0
10-2: a P100,000 2007 2008 Contract Price P9,000,000 P9,000,000 Less: Total estimated cost _7,800,000 _8,100,000 Estimated gross profit 1,200,000 900,000 % of completion: 2007 (3,900,000/7,800,000) 50% 2008(6,300,000/8,100,000) _________ ______78% Gross profit earned to date 600,000 700,000 Less: Gross profit earned in prior year ________– ___600,000 Gross profit earned each year P 600,000 P 100,000
10-3: a Contract Price P6,000,000 Less: Total estimated cost (3,600,000 + 1,200,000) _4,800,000 Estimated gross profit 1,200,000 % of completion (3,600,000/4,800,000) _____75% Gross profit earned to date 900,000 Less: Gross profit earned in 2007 __600,000 Gross profit earned in 2008 P 300,000
10-4: b Contract Price P3,000,000 Less: Total estimated cost (930,000 + 2,170,000) _3,100,000 Loss (P 100,000)
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10-5: b Total cost to date, 2008 (4,800,000 X 60%) P2,880,000 Less: Cost incurred in 2007 (4,500,000 X 20%) __900,000 Cost incurred in 2008 P1,980,000
10-6: a Percentage of Completion Method: Contract Price P3,000,000 Less: Total estimated cost (900,000/1,800,000) _2,700,000 Estimated gross profit 300,000 % of completion (900,000/2,700,000) ___33.33% Gross profit recognized, 2007 100,000 Add: Cost Incurred ___900,000 Construction in Progress - 2007 P 1,000,000
Zero Profit Method: Cost incurred to Construction in Progress - 2007 P 900,000
CHAPTER 10
MULTIPLE CHOICE ANSWERS AND SOLUTIONS
10-1: a Percentage of Completion Method: Contract Price P1,000,000 Less: Total estimated cost Cost incurred P 200,000 Estimated remaining cost _400,000 __600,000 Gross profit estimated 400,000 % of completion (200,000/600,000) __33 1/3% Gross profit to be recognized P 133,333
Zero Profit Method: 0
10-2: a P100,000 2007 2008 Contract Price P9,000,000 P9,000,000 Less: Total estimated cost _7,800,000 _8,100,000 Estimated gross profit 1,200,000 900,000 % of completion: 2007 (3,900,000/7,800,000) 50% 2008(6,300,000/8,100,000) _________ ______78% Gross profit earned to date 600,000 700,000 Less: Gross profit earned in prior year ________– ___600,000 Gross profit earned each year P 600,000 P 100,000
10-3: a Contract Price P6,000,000 Less: Total estimated cost (3,600,000 + 1,200,000) _4,800,000 Estimated gross profit 1,200,000 % of completion (3,600,000/4,800,000) _____75% Gross profit earned to date 900,000 Less: Gross profit earned in 2007 __600,000 Gross profit earned in 2008 P 300,000
10-4: b Contract Price P3,000,000 Less: Total estimated cost (930,000 + 2,170,000) _3,100,000 Loss (P 100,000)
164 Chapter 10
10-5: b Total cost to date, 2008 (4,800,000 X 60%) P2,880,000 Less: Cost incurred in 2007 (4,500,000 X 20%) __900,000 Cost incurred in 2008 P1,980,000
10-6: a Percentage of Completion Method: Contract Price P3,000,000 Less: Total estimated cost (900,000/1,800,000) _2,700,000 Estimated gross profit 300,000 % of completion (900,000/2,700,000) ___33.33% Gross profit recognized, 2007 100,000 Add: Cost Incurred ___900,000 Construction in Progress - 2007 P 1,000,000
Zero Profit Method: Cost incurred to Construction in Progress - 2007 P 900,000