On january 1 20x1 abc co enters into a contract with

33. On January 1, 20x1, ABC Co. enters into a contract with a customer for the
construction of a building. The contract price is ₱1,000,000. The following are the
transactions during 20x1:
 At contract inception, the customer makes an advance payment of ₱100,000 as
facilitation fee.
 ABC Co. incurs total contract costs of ₱300,000 during the period.
 The estimated costs to complete as of year-end amounts to ₱500,000.

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 ABC Co. collects the billing, net of 10% retention by the customer to be used to
rectify any unsatisfactory work determined at the completion of the contract.
How much is the cost of construction that is recognized as expense in 20x1?
-
34. ABC Co. started work on two separate projects during 20x1. Information on
these projects is shown below:
Project
Contract
price Costs incurred
Estimated costs
to complete
Progress
billings
A 9,000,000 4,000,000 2,000,000 5,000,000
B 8,000,000 5,000,000 - 8,000,000
How much is the total balance of the “construction in progress” accounts as of
December 31, 20x1 under zero-profit method?
35. PFRS 15 requires how many steps in recognizing revenue from contracts with
customers?

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36. If the promise to transfer a license is distinct,
a. the entity treats all the promises in the contract as a single performance
obligation.
b. the entity applies the general principles of PFRS 15 to determine whether the
performance obligation is satisfied over time or at a point in time.
c. the entity applies the specific principles of PFRS 15 to determine the nature of
the entity’s promise to transfer the license as either a “right to access” or a
“right to use” the entity’s intellectual property.
d. b and c