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C
2. D
3. A
4. D
To get the cost incurred to date, PoC x total cost at completion date
36% x 7,350,000
=2,646,000
Solution:
Contract price 4,000,000
Less: total estimated cost
Cost incurred each year 187,200
Add cost incurred in prior year 0
Cost incurred to date 187,200
Add: estimated cost to complete 0
Total estimated cost
Estimated gross profit
Multiply by percentage of completion
Recognized gross profit to date
Less: recognized profit in prior year/s 0
Realized gross profit each year 72,800
The CIP is P260,000( cost incurred to date plus profit realized to date), to get the percentage of completion, we have
to divide P260,000 by P4,000,000 (CIP/Contract cost)
The percentage of completion to date is 6.5%
To get the estimated total cost to complete the project (estimated cost at completion)
Cost incurred to date divide by percentage of completion (187,200/6.5%) squeeze method lang guys.
Total estimated cost to complete the project = P2,880,000
II. A
This is an unprofitable contract kase at the start palang, the total estimated cost to complete the project/contract is >
than the contract price
To get the contract assets or contract liabilities, we have to get the difference of CIP and progress billings
CIP = cost incurred to date + profit realized to date or – loss incurred to date
In 2020, meron kanang loss to date na 720,00 (9,600,000+480,000-8,640,000-2,160,000)
Therefore, CIP to date in 2020 is 7,920,000 (8,640,000 cost – loss 720,000)
7,920,000 – 8,700,000 = 780,000 contract liabilities for both method