Professional Documents
Culture Documents
1. The following data pertains to X Company's construction jobs, which commenced during
2019
Construction price P420,000
Cost incurred in 2019 240,000
Estimated costs to complete 120,000
What amount of gross profit will be realized by X in 2019?
Answer: 40,000
Solution:
Construction Price 420,000
Less: Total Estimated Costs (240,000 + 120,000) 360,000
Estimated Revenue 60,000
Multiply by percentage of completion (240,000/360,000) 67%
Gross Profit for 2019 40,000
2. The following data pertains to X Company's construction jobs, which commenced during
2019
Answer: 280,000
Solution:
Construction Price 420,000
Multiply by percentage of completion (240,000/360,000) 67%
Revenue 280,000
3. As of the year 2019, X Corporation already incurred P900,000 in pursuance of its project.
The project is already 25% complete. X Corp. estimates that this project will give it a gross
profit of P4,000,000. How much is the contract price that was agreed by X Corporation and
the proponent of the project?
Answer: 7,600,000
Solution:
4. X Company is executing a gigantic project constructing the tallest building in the country.
The project is expected to take three years to complete.
The company has signed a fixed price contract of P12,000,000 for the construction of the
prestigious building.
The details of the costs incurred to date in the first year are:
Site labor costs P1,000,000
Cost of construction material 3,000,000
Depreciation of special PPE used in construction 500,000
Marketing and selling costs to get the building in
the country the right exposure 1,000,000
At the end of the first year, it has an estimated cost to complete the contract of P9 million.
What profit or loss from the contract should X Corporation recognize at the end of the first
year?
Answer: 1,500,000
Solution:
Material 5,000,000
Labor 2,000,000
Construction Overhead 2,000,000
Total Cost Incurred 9,000,000
6. A and B join an arrangement for the sale of certain merchandise. The participants agreed
the following:
A shall be allowed a commission of 10% on his net purchases; the participants shall be
allowed a commissions of 25% on their respective sales; and A and B shall divide the profit
or loss 60:40. Joint operation transaction follows:
Dec 1: A made cash purchases of P57,000
Dec 3: B pays the operation expenses pf P9,000
Dec 5: Sales are as follows: A, P48,000; L, P36,000. The participants keep their own cash
receipts.
Dec 7: A returned unsold merchandise and receives P15,000 cash.
Dec 15: The participants make cash settlement
In the distribution of the net profit of the operation, the share of A is?
Answer: 4,680
7. A and B join an arrangement for the sale of certain merchandise. The participants agreed
the following:
A shall be allowed a commission of 10% on his net purchases; the participants shall be
allowed a commissions of 25% on their respective sales; and A and B shall divide the profit
or loss 60:40. Joint operation transaction follows:
In the distribution of the net profit of the operation, the share of B is?
Answer: 3,120
8. A and B join an arrangement for the sale of certain merchandise. The participants agreed
the following:
A shall be allowed a commission of 10% on his net purchases; the participants shall be
allowed a commissions of 25% on their respective sales; and A and B shall divide the profit
or loss 60:40. Joint operation transaction follows:
Answer: 14,880
9. On January 1, 2019, X Company entered into a joint agreement classified as a joint venture.
For an investment of P2,000,000, X Company obtained 30% interest in Y Joint Venture, Inc.
During the year, the joint venture reported a profit of P4,000,000 and other comprehensive
income of P800,000, for a total comprehensive income of P4,800,000. The joint venture
declared dividends of P2,400,000 during the year.
How much is the carrying amount of the investment in venture on December 31, 2019?
Answer: 2,720,000
Solution:
Investment 2,000,000
Add: Profit (4,000,000 x 30%) 1,200,000
Other Comprehensive Income (800,000 x 30%) 240,000
Less: Dividends (2,400,000 x 30%) (720,000)
Carrying amount 2,720,000
10. On January 1, 2019, entities A and B each acquired 30% of the ordinary shares that carry
voting rights for P300,000 at a general meeting of shareholders of entity Z. Entities A and B
immediately agreed to share control over entity Z. For the year ended December 31, 2019,
entity Z recognized profit of P400,000. On December 30, 2019, entity Z declared and paid a
dividend of P150,000 for the year 2019. On December 31, 2014, the fair value of each
venturers in entity Z is P425,000
Investment 300,000
Add: Profit (400,000 x 30%) 120,000
Less: Dividends (150,000 x 30%) (45,000)
Carrying amount 375,000
11. Nor Co. sends P50,000 (100 packs of supplements) worth of goods on consignment to Nee
Enterprises. Following costs are incurred:
Answer: 13,750
Sales 40,000
Less: Costs and expenses
Cost of sales (50 x 500) (25,000)
Shipping costs (500 x 50/100) (250)
Reimbursable finishing costs (2,000)
Commission (40,000 x 10%) (4,000)