Name: CIARWENA T.

PANGCOGA
Course/Section: ACT130 - Bb

QA6 CONSTRUCTION CONTRACTS

Problem 1

A) Schedule to determine the amount of income that the company should recognizie on eve

Particulars 2021
1. Total Contract Price 2,000,000
2. Variation/Incentive/Penalty 0 0
3. Adjusted Contract Price 2,000,000
4. Cost, Incurred to Date 600,000
5. Estimated Cost to Complete 900,000
6. Total Estimated Cost -1,500,000
7. Expected Gross Profit/Loss 500,000
8. Percentage of Completion 40%
9. Gross Profit, Earned to Date 200,000
10. Gross Profit, Prior Years
11. Gross Profit/Loss, Earned this
Year 200,000

600/1500 = 40%
3075/4100 = 75%

B) Construction-in-progress balance as of every year

CIP, 2021 CIP, 2022
0 800,000
600,000 2,475,000
200,000 100,000
800,000 3,375,000

3,075,000 - 600K = 2,475

or simply, or simply,
2M x 40% = 800,000 4.5M x 75% = 3,375,000

another solution

CIP, 2022
3,075,000
300,000
3,375,000
pany should recognizie on every year

2022 2023
2,000,000 2,000,000
2,500,000 2500-500
4,500,000 4,000,000
3,075,000 3,780,000
1,025,000 420,000
-4,100,000 -4,200,000
400,000 -200,000
75%
300,000 -200,000

-200,000 -300,000
100,000 -500,000

CIP, 2022 CIP, 2023

800,000 3,375,000
2,475,000 705,000
100,000 500,000
3,375,000 3,580,000

3,075,000 - 600K = 2,475,000 cost incurred this year = 3780-3075 = 705K

4.5M x 75% = 3,375,000

another solution

CIP, 2022 CIP, 2023

3,780,000 200,000 (to date)
3,580,000
A) Schedule to determine the amount of income/loss that the compant should recognize on

Particulars 2020
1. Total Contract Price 5,000,000
2. Variation/Incentive/Penalty
3. Adjusted Contract Price 5,000,000
4. Cost, Incurred to Date 2,200,000
5. Estimated Cost to Complete 3,300,000
6. Total Estimated Cost -5,500,000
7. Expected Gross Profit/Loss -500,000
8. Percentage of Completion 40%
9. Gross Profit, Earned to Date -500,000
10. Gross Profit, Prior Years
11. Gross Profit/Loss, Earned this
Year -500,000

CONSTRUCTION IN PROGRESS (20) CONTRACT BILLIN

2,200,000
500,000
1,700,000

Construction in Progress 1,700,000

Contact Billings -1,500,000
Excess of CIP over CB (2020) 200,000

B) Schedule to determine the amount of income/loss that the compant should recognize on

Particulars 2020
1. Construction Revenue 2,200,000
2. Cost, Incurred to date 2,200,000
2. Gross Profit, Earned this Year 0

CONSTRUCTION IN PROGRESS (21) CONTRACT BILLIN

2,200,000
1,400,000
3,600,000

Construction in Progress 3,600,000

Contact Billings -3,500,000
Excess of CIP over CB (2021) 100,000

C) Percentage of Completion: 50% (2020), 90% (2021), 100% (2022)

 Particulars 2020
1. Total Contract Price 5,000,000
2. Variation/Incentive/Penalty
3. Adjusted Contract Price 5,000,000
4. Percentage of Completion 50%
5. Revenue 2,500,000
6. Actual Cost -2,200,000
7. Gross Profit, to date 300,000
8. Gross Profit, Prior Years
7. Gross Profit, This Year 300,000
mpant should recognize on every year (PERCENTAGE OF COMPLETION METHOD)

2021 2022
5,000,000 5,000,000

5,000,000 5,000,000
3,600,000 4,800,000
900,000
-4,500,000 -4,800,000
500,000 200,000
80% 100%
400,000 200,000
-500,000 -400,000

900,000 -200,000

CONTRACT BILLINGS(20)
1,500,000 5M*30%

1,700,000
-1,500,000
200,000

mpant should recognize on every year (COST RECOVERY METHOD)

2021 2022
1,400,000 1,400,000
-1,400,000 -1200000
0 200,000

CONTRACT BILLINGS(21)
1,500,000 5M*30%
2,000,000 5M*40%
3,500,000

3,600,000
-3,500,000
100,000

22)
 2021
5,000,000

5,000,000
90%
4,500,000
-3,600,000
900,000
-300,000
600,000
 Using ZERO PROFIT METHOD

CIP, 2023
40,000,000 100,000,000
10,000,000
20,000,000
50M - 20M Rev Rec 30,000,000
100,000,000 100,000,000
 REALIZED GROSS PROFIT 2022

Estimated Cost of Completion 7,350,000

Percentage of Completion (3.78M/10.5M) 36.00%
Cost Incurred to Date 2,646,000
Construction in Progress 3,780,000
Realized Gross Profit, 2022 1,134,000
Using PERCENTAGE OF COMPLETION METHOD - Cost to Cost Method

Particulars 2021
1. Total Contract Price 10,000,000
2. Variation/Incentive/Penalty
3. Adjusted Contract Price 10,000,000
4. Cost, Incurred to Date 3,000,000
5. Estimated Cost to Complete 5,000,000
6. Total Estimated Cost -8,000,000
7. Expected Gross Profit/Loss 2,000,000
8. Percentage of Completion 37.5%
9. Gross Profit, Earned to Date 750,000
10. Gross Profit, Prior Years
11. Gross Profit/Loss, Earned this
Year 750,000

CIP, 2023
3,000,000
750,000
1,500,000
3,740,000
7,940,000
 2022 2023
10,000,000 10,000,000

10,000,000 10,000,000
4,500,000 8,240,000
4,500,000 2,060,000
-9,000,000 10,300,000
-1,000,000 -300,000
50% 80%
-1,000,000 -300,000
-750,000 -500,000

-250,000 -800,000

CIP, 2023
250,000
800,000