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  • LTCC Easy 1

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    MDM Construction was contracted to build an office building for $3,650,000. In 2020, they incurred $700,000 in costs and estimated $2,100,000 remaining. In 2021, costs were $1,860,000 with $640,000 estimated remaining. They also began constructing an apartment building for $4,200,000 in 2020. In 2020, costs were $850,500 with an unknown estimated remaining. In 2021, costs were $1,800,000 with an unknown CIP and estimated remaining.

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    LTCC-easy-1

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    MDM Construction was contracted to build an office building for $3,650,000. In 2020, they incurred $700,000 in costs and estimated $2,100,000 remaining. In 2021, costs were $1,860,000 with $640,000 estimated remaining. They also began constructing an apartment building for $4,200,000 in 2020. In 2020, costs were $850,500 with an unknown estimated remaining. In 2021, costs were $1,800,000 with an unknown CIP and estimated remaining.

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    10 views1 page

    LTCC Easy 1

    Uploaded by

    aly
    MDM Construction was contracted to build an office building for $3,650,000. In 2020, they incurred $700,000 in costs and estimated $2,100,000 remaining. In 2021, costs were $1,860,000 with $640,000 estimated remaining. They also began constructing an apartment building for $4,200,000 in 2020. In 2020, costs were $850,500 with an unknown estimated remaining. In 2021, costs were $1,800,000 with an unknown CIP and estimated remaining.

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    LTCC

    Prob. 1 – On March 1, 2020, MDM Construction was contracted to build an office building for a total
    contract price of 3,650,000. Details below:
    2020 2021 2022
    Contract cost incurred 700,000 1,860,000 600,000
    Estimated cost to complete 2,100,000 640,000 -

    Compute the ff. for 2020 to 2022


    A. Revenue
    B. CIP
    C. RGP
    Assuming estimates are:
    A. Reliable - cost to cost (POC)
    B. Not Reliable – recovery method (ZPM)

    Prob. 2 – On January 1, 2020, MDM Construction Corp. begun constructing a 4,200,000 apartment
    building. The ff. are the relevant information provided by the corporation. MDM uses POC method. For
    the year ended Dec. 31, 2021, MDM billed its client an additional 55% of the contract price.
    2020 2021 2022
    CIP 882,000 ? ?
    Estimated cost to complete ? ? -
    Cost incurred 850,500 1,800,000 1,200,000

    In 2020, excess of CIP over progress billings – 168,000 current liability


    In 2021, excess of CIP over progress billings – 661,500 current liability

    How much is the estimated remaining cost in 2020?


    How much is the RGP/(RGL) in 2021?
    How much is the balance of CIP in 2021?

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