ACC 202
CONSTRUCTION (Questions)
QUESTION 1
Mac Construction entered a contract to build a new multi-purpose sports
centre on 1 January 2016. The construction is expected to take three years
to complete at a cost of RM10.5 million.
Costs were budgeted at
2016
2017
2018
30%
45%
25%
The contract required 3 equal payments of RM4 million at 31 December
2016 and 31 December 2017 and on completion (expected 31 December
2018).
Accumulated Progress billings for the year ended 31 December 2016,
2017 and 2018 are expected to be RM3 million, RM9.5 million and
RM12 million respectively.
Required:
(a)
Calculate the percentage of completion for 2016, 2017 and 2018.
(b)
Prepare extracts of statements of profit and loss, showing complete
calculation of revenues recognised, costs recognised and gross
profits for each of the three years.
(c)
Prepare extracts of statements of financial position for each of the
three years, showing the contract asset or contract liability .
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ACC 202
Cost to date
Cost to complete
Total estimated cost
% of completion
2016
2017
2018
RM’000
RM’000
RM’000
3,150
7,875
10,500
7,350
2,625
10,500
10,500
10,500
30%
75%
100%
Contract price
SOPL
Revenue to date
Revenue recognised
Revenue for year
Cost to date
Recognised previous years
Cost for year
Profit/(loss)
SOFP
Contract asset
Contract liability
Working
Contract costs recognised
Recognised profits
Progress billing
Contract asset/liability
2016
2017
2018
RM’000
RM’000
RM’000
3,600
9,000
12,000
3,600
9,000
3600
5,400
3,000
3,150
3,150
7,875
3,150
4,725
10,500
7,875
2625
450
675
375
2016
RM’000
600
-
2017
RM’000
2018
RM’000
500
-
3,150
7,875
10,500
____450__ ______1,125
______1,500
3,600
9,000
12,000
______3,000 ______9,500
______12,000
______600 ______(500) ______-
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ACC 202
Question 2
Elegent Construction Sdn Bhd has a contract to construct a twin-building
in Kuala Lumpur. The contract price is RM40 million. The construction
started in July 2016 and was completed in November 2018.
The following table shows the position of the contract at the end of the
year 2016, 2017 and 2018.
2016
2017
2018
RM’000 RM’000 RM’000
Variation to the contract price - increase
1,000
Cumulative costs incurred to date
8,750
25,830
32,000
Estimated cost to complete
26,250
11,070
Progress billings to date
8,000
29,500 41,000
Elegent Construction accrued profit on the contract using the percentage
of completion method measured by cost to date to total estimated cost.
Required:
(a) Calculate the percentage of completion for 2016, 2017 and 2018.
(b) Prepare extracts of statements of profit and loss, showing complete
calculation of revenues recognised, costs recognised and gross
profits for each of the three years.
(c) Prepare extracts of statements of financial position for each of the
three years, showing the contract asset or contract liability.
Cost to date
Cost to complete
Total estimated cost
% of completion
Contract price
2016
2017
2018
RM’000
RM’000
RM’000
8,750
25,830
32,000
26,250
11,070
35,000
36,900
32,000
25%
70%
100%
40m
40m
41m
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ACC 202
SOCI
Revenue to date
Revenue recognised
Revenue for year
Cost to date
Recognised previous years
Cost for year
Profit/(loss)
SOFP
Contract asset
Contract liability
Working
Contract costs recognised
Recognised profits
Progress billing
Contract asset/liability
2016
2017
2018
RM’000
RM’000
RM’000
10,000
28,000
41,000
10,000
28,000
10,000
18,000
13,000
8,750
8750
1,250
2016
RM’000
2000
25,830
32,000
8,750 25830
17,080
6,170
920
2017
RM’000
6,830
2018
RM’000
1500
8750
25830
32,000
______1250 ______2170 ______9,000
10,000 28000
41,000
______8000 ______29500 ______41,000
______2000 ______(1500) ______-
Question 3
ABC Sdn Bhd has a contract to construct a RM4,500,000 bridge at an
estimated cost of RM4,000,000. The construction started in July 2019,
and the bridge is to be completed in October 2021. The following data
pertain to the construction period. (Note that by the end of 2020 ABC has
revised the estimated total cost from RM4,000,000 to RM4,050,000.
The following table shows the position of the contract at the end of the
year 2019, 2020 and 2021.
2019
2020
2021
RM’000 RM’000 RM’000
Cumulative cost to date
1,000
2,916 4,050
Estimated cost to complete
3,000
1,134
Progress billings for the year
900
2,400 1,200
Cash collected during the year
750
1,750
2,000
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ACC 202
ABC accrued profit on the contract using the percentage of completion
method measured by cost to date to total estimated cost.
Required:
(a) Calculate the percentage of completion for 2019, 2020 and 2021.
(b) Prepare extracts of statements of profit and loss, showing complete
calculation of revenues recognised, costs recognised and gross
profits for each of the three years.
(c) Prepare extracts of statements of financial position for each of the
three years, showing the contract asset or contract liability and
accounts receivable.
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ACC 202
Solution
Cost to date
Cost to complete
Total estimated cost
% of completion
Contract price
SOCI
Revenue to date
Revenue recognised
Revenue for year
Cost to date
Recognised previous years
Cost for year
Profit/(loss)
SOFP
Contract asset
Contract liability
Accounts receivable
Working
Contract costs recognised
Recognised profits
Progress billing (accumulated)
Contract asset/liability
2019
2020
2021
RM’000
RM’000
RM’000
1,000
2,916
4,050
3,000
1,134
4,000
4,050
4,050
25%
72%
100%
4,500
4,500
4,500
2016
2017
2018
RM’000
RM’000
RM’000
1,125
3,240
4,500
1,125
3,240
1,125
2,115
1,260
1,000
1,000
2,916
1,000
1,916
4,050
2,916
1,134
125
199
126
2016
RM’000
225
2017
RM’000
2018
RM’000
60
150
800
-
1.000
125324
1,125
900
225
2,916
450
3,240
3,300
(60)
4,050
4,500
4,500
-
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ACC 202
Question 4
The following data relate to contract XZ for the years ended 31
December X4 and 31 December X5
Date
contract
started
1.4.X4(Contract Price)
–
Year X4
Year X5
RM million
RM million
200
200
Variation to price (increase)
20
Cost to date
75
147
Cost to complete
145
63
Accumulated Progress billing
70
140
Required:
(a) Calculate the percentage of completion for X4 and X5.
(b) Prepare extracts of statements of profit and loss, showing complete
calculation of revenues recognised, costs recognised and gross profits for
each of the two years.
(c)Prepare extracts of statements of financial position for each of the two
years, showing the contract asset or contract liability
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ACC 202
Solution
Year X4
RM Million
Contract price
200
Total estimated contract cost
220
Estimated loss
(20)
The percentage of completion was:
Cost to date/ Cost to date plus estimated costs to complete x 100
75,000,000/(75,000,000 + 145,000,000) x 100 = 34%
Statement of profit or loss for the year ended 31 December X4
RM Million
Revenue (RM200 million x 34%)
68
Costs (34% of RM220 million)
(75)
Future loss on contract
(13)
Loss
(20)
Statement of Financial Position as at 31 December X4
RM million
Contract liability
15
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ACC 202
Working:
RM Million
Contract costs to date
75
Recognised profit (less recognized losses)
(20)
55
Progress billing
(70)
Contract liability
15
Year 5
The percentage of completion was:
Cost to date/ Cost to date plus estimated costs to complete x 100
147,000,000/(147,000,000 + 63,000,000) x 100 = 70%
RM Million
Contract price
200
Variation
20
Total estimated contract price
220
Total estimated cost
210
Estimated profit
10
Statement of profit or loss for the year ended 31 December X5
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ACC 202
RM Million
Revenue (RM220 million x 70%)
154
Less: Revenue recognized in prior period
68
RM Million
86
Costs (70% of RM210 million )
147
Less: Cost recognized in prior period
88
59
Profit
27
Statement of Financial Position as at 31 December X5
RM million
Contract asset
14
Working:
RM Million
Contract costs to date
Recognised profits (27-20 million)
147
7
154
Progress billing
(140)
Contract asset
14
10