Chapter-4 of part 2 midterm notes PDF

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Summary

following information was collected for each year of the project — Year 1 , Year 2, and Year 3:cost expended during the yearexpected additional cost to completionsupport timbers laid during the yearadditional support timbers to be laidtrail feet constructed during the yearadditional feet to be const...

Description

following information was 2, and Year 3:

collected for each year of the project — Year 1 , Year

cost expended during the year

expected additional cost to completion

support timbers laid during the year

additional support timbers to be laid

trail feet additional constructed feet to be during the constructed year

Year 1

100,000

450,000

150

850

3,000

15,200

Year 2

150,000

280,000

300

520

7,500

8,200

Year 3

250,000

0

500

0

8,000

0

Compute the amount of revenue to be recognized in Year 3, assume that the company employs the efforts-expended method of estimating percentage of completion and the company measures its progress by the number of support timbers laid in the trail: a. P428,866 c. P350,OOO b. 422640 d. Cannot be determined 14.

Using the same information in No. 3, compute the amount of revenue to be recognized in Year 3, assume that the company employs an output measure and the company measures its progress by the number of trail feet that have been completed: a. P428,864 c. P350,802 b. 422,640 d. Cannot be determined

Use the following information for questions 15-18: Seasons Construction is constructing an office building under contract for Cannon Company. The contract calls for progress billings and payments Of PI each quarter. The total contract price is PI 4,880,000 and Seasons estimates total costs of PI 4,200,000. Seasons estimates that the building wilt take 3 years to complete, and commences construction on January 2, 20x5.

15.

As of December 31, 20x5, Seasons estimates that it is 30% complete with the construction. based on costs incurred. What is the total amount of Revenue from Long-Term Contracts recognized for 20x5 and what is the balance in the Accounts Receivable account assuming Cannon Company has not yet made its last quarterly payment? revenue

accounts

revenue

accounts

receivable

receivable

a.

4,960,000

4,960,000

c.

4,464,000

1,240,000

b.

4,260,000

1,240,000

d.

4,260,000

4,960,000

16.

At December 31, 20x5, Seasons Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to PI 4,400,000 due to unanticipated price increases. On December 31 , 20x4, Seasons estimated it was 30% complete. What is the total amount of Construction Expenses that Seasons will recognize for the year ended December 31 20x5? a. PIO.800,OOO c. P6ß90,OOO b. P 6,540.000

17.

At December 31, Seasons Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to PI due to unanticipated price increases. What is reported in the balance sheet at December 31 , for Seasons as the difference between the Construction in Process and the Billings on Construction in Process accounts, and is it a debit or a credit? Difference between the accounts Debit/Credit a. 3,380,000 Credit b. PI 240,000 Debit c. P 880,000 Debit d. 1,240,000 Credit

18.

Seasons Construction completes the remaining 25% of the building construction on December 31, 20x6, as scheduled. At that time the total costs of construction were P 15,000,000. At December 31 , the estimates were 75% complete and total costs of P 14,400,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that Seasons will recognize for the year ended December 31 , revenue

expenses

a.

14,880,000

15,000,000

b.

3,720,000

3,750,000

revenue

expenses

c.

3,720,000

4,200,000

d.

3,750,000

3,750,000

19.

DJ Builders, Inc. has consistently used the percentage-of-completion method (over time) of accounting for construction-type contracts. During 20x5, DJ started work on a fixed-price construction contract that was completed in 20...