Construction Contracts 33 <2 Use the following information ‘for the next two questions: In 20x1, Taste Construction Co, started work on a P5M fixed price contract. Information on the construction is shown below: 20x1 20x2 20x3 _ Costs incurred to date 1,425,000 4,040,000 5,080,000 Estimated costs to complete 3,325,000 1,010,000 = raste uses the percentage of completion method (based on costs) recognizing revenue and profit from the contract. How much is the loss provision recognized in 20x2? a. 25,000 c. 10,000 b. 15,000 4.5,000 9. How much is the profit (loss) recognized in 20x3? a. (30,000) c. (40,000) b. 30,000 . 40,000 Use the following information for the next evo questions: "Bass Co. appropriately uses the cost-to-cost method in measuring its progress on a construction contract with a customer. Information on this contract, which was completed in 20x3, is shown below: 20x1 20x2 20x3 _ Transaction price 20,000,000 — 20,000,000 20,000,000 "Profit each year 400,000 1,400,000 (200,000) _ Costs incurred each year 3,600,000 2 8,200,000 {AICPA - Adapted) 10. How much are the contract costs incurred in 20x2? a. 5,800,000 . 6,600,000 b. 6,200,000 d. 10,200,000 11. How much are the estimated additional costs to complete as of December 31, 20x2? 5,400,000 ce. 7,200,000 a. d. 8,600,000 b. 6,800,000