CHAPTER 10.pdf - Long-Term Construction Contracts 176...

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Long-Term Construction Contracts 176 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 2012 2013 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: 2012 (3,900,000/7,800,000) 50% 2013(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 2012 __600,000 Gross profit earned in 2013 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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177 Chapter 10 10-5: b Total cost to date, 2013 (4,800,000 X 60%) P2,880,000 Less: Cost incurred in 2010 (4,500,000 X 20%) __900,000 Cost incurred in 2013 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, 2012 100,000 Add: Cost Incurred ___900,000 Construction in Progress - 2012 P 1,000,000 Zero Profit Method: Cost incurred to Construction in Progress - 2012 P 900,000 10-7: a 2012 2013 Contract Price P4,200,000 P4,200,000 Less: Total estimated cost _3,000,000 _3,750,000 Estimated gross profit 1,200,000 450,000 % of completion _____20% ____100% Gross Profit earned to date 240,000 450,000 Gross Profit earned in prior year _______ __240,000 Gross Profit earned this year P 240,000 P 210,000 10-8: b Collections: Contract Billings P 47,000 Less: Accounts receivable ___15,000 Collections P 32,000 Initial Gross Profit: Contract Price P 800,000 Gross Profit rate: Income recognized 10,000 Divide by Construction in Progress 50,000 = _____20% Initial Gross Profit P 160,000
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Long-Term Construction Contracts 178 10-9: a Gross profit (loss) earned in 2013 (P 20,000) Gross profit earned in prior years _180,000 Gross profit earned to date - 2013 160,000 Divide by percentage of completion - 2013 ___100% Estimated gross profit - 2013 160,000 Less: Contract price 2,000,000 Total estimated cost 1,840,000 Less: Cost incurred - 2013 _820,000 Cost incurred to date - 2012 1,020,000 Less: Cost incurred - 2011 __360,000 Cost incurred in 2012 P 660,000 10-10: b Gross profit earned to date - 2012 (P40,000 + P140,000) P 180,000 Divide by estimated gross profit - 2012: Contract price P2,000,000 Gross profit rate [180,000/(1,020,000 + 180,000)] ___X 15% __300,000 Percentage of completion - 2012 60% 10-11: a, Refer to Q 10-10 solutions. 10-12: d Contract price P2,000,000 Estimated gross profit - 2012 (Refer to Q 10-10) __300,000 Total estimated cost 1,700,000 Less: Cost incurred to date - 2012 (refer to Q 10-9) 1,020,000 Estimated cost to complete - 2012 P 680,000 10-13: d 2012: Construction in progress P 244,000 Less: Construction costs __210,000 Gross profit recognized - 2012 P 34,000 2013: Construction in progress (P728,000-P244,000) P 484,000 Less: Construction costs __384,000 Gross profit recognized - 2013 P 100,000
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