1. The SOLID CONSTRUCTION COMPANY has a 3-year contract to construct a bridge. The contract price
is P5,600,000. The following data pertain to the construction period.
The company uses cost-to-cost percentages in measuring progress to satisfying performance
obligation.
Required:
1. Calculate revenue, cost, and gross profit recognized each year-end.
2. Determine the balance sheet presentation of this contract at ends of 20x1 and 20x2.
3. Prepare all journal entries each year.
2. Using the information above, assume now that the entity uses the zero-profit method.
Required:
1. Calculate revenue, cost, and gross profit recognized each year-end.
2. Determine the balance sheet presentation of this contract at ends of 20x1 and 20x2.
3. Prepare the year end entries each year.
3. On January 1, 20x3, DIVERSIFIED CONSTRUCTION CORPORATION entered into a 3-year contract to
build a dam. The required contract price is P5,529,600 and the estimated cost is P4,915,200. The
following cost data relate to the construction activities.
Diversified uses cost-to-cost percentage of completion method.
Required:
1. Compute the Revenue, cost, and gross profit or loss each year.
2. Determine the balance sheet presentation of the contract at the ends of 20x3 and 20x4.
3. Prepare all the necessary journal entries.
4. Tripartite Construction Company began operations in 2020. Construction activity for the first year
follows:
Contract
Billings
Collections Act. cost
Addl cost
Proj Price
to date
to date
to date
to complete
A
560,000
360,000
340,000
450,000
150,000
B
670,000
220,000
210,000
126,000
504,000
C
520,000
520,000
520,000
330,000
0
Required:
1. Calculate the revenue, costs and profit/loss for 2020.
2. Present the balance sheet at the end of 2020.
5. Information on an ongoing contract with a fixed contract price of PIM is shown below:
Cost of construction
(contract costs recognized as expense)
P500,000
Percent complete
(based on a survey by a professional)
80%
Required: Compute for the gross profit for the year.
6. In 20x1, ROMAN Co. was subcontracted to construct the first portion of a 94.5-kilometer, four-lane
expressway. Construction started n 20x1 and it was expected that the expressway will be opened to
the public in three years' time.
Per House Resolution, the total contract price for the first portion of the expressway consisting of 41
kilometers is P13B. ROMAN uses the output method based on physical proportion of contract work in
estimating the stage of completion of a project. Additional information on the project is shown below:
Year
20X1
20X2
Cost Incurred
each Year
2.3B
5.5B
Est Costs
to complete
7.7B
2.4B
No. of Kms Completed
during the year
10.25
22.55
Requirement: Compute for the revenue and the cost of construction for 20X1 and 20X2