Chart Title

CHAPTER 8- Revenue Recognition: Construction

Multiple Choice Contracts
A 1. DJD Construction is constructing a building for Hotel Dian. Under the construction agreement it DJD ca
complete construction. Hotel Dian would own the partially completed building and c construction company to com
the job. When should DJD recognize revenue: as the buildin or after construction is completed?
a. Over time c. No revenue rec
b. Point in time d. No performanc

C 2. On January 1, 20x6, Silver Construction Company signed a contract to build a custom garage fo recived
10,00 in advance for the job. The new garage will be built on the customer's land. To project, Silver must first build
concrete floor, construction wooden pillars and walls, and final Silver normally charges stan-alone prices of P3,000
P4,000, and P5,000, respectively,for eahc o smaller tasks if done separately. How may performance obligations exi
this contract?
a. 0 c. 2
b. 1 d. 3

C 3. DJ Builders Construction builds luxury houses in remote areas. On June 1,20x6, the company si build a
in an undeveloped section of a mountainside, and received P2million in advance complete the project, the compa
must construcct a pathway leading to the building lot, clear and construct a wooden house. Normally, the compan
would change P 400,000, P 1,400,000, respectively, for each of these tasks if done separately. Given the informatio
above, how man obligations are included in this contract?
a. 0 c. 2
b. 1 d. 3
 C
4.

Total estimated cost of the project = 18 million

the percentage of completion of this contract of the year-end is:
a. 33 1/3% (=6.0/ 18.0) c. 25% (=4.5/18
b. 27% (=4.5/16.5) d. 39% (7.0/18)

B 5. Manroe Construction Company uses the percentage-of-completion (over time) method of accounting.
20x4, Monroe began work on a contract it had received which provided for a
contract price of P 15,000,000. Other details follow:

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 Chart Title

CHAPTER 8- Revenue Recognition: Construction

ultiple Choice Contracts
A 1. DJD Construction is constructing a building for Hotel Dian. Under the construction agreement it DJD can't
complete construction. Hotel Dian would own the partially completed building and c construction company to complete
the job. When should DJD recognize revenue: as the buildin or after construction is completed?
a. Over time c. No revenue rec
b. Point in time d. No performanc

C 2. On January 1, 20x6, Silver Construction Company signed a contract to build a custom garage fo recived P
10,00 in advance for the job. The new garage will be built on the customer's land. To project, Silver must first build a
concrete floor, construction wooden pillars and walls, and final Silver normally charges stan-alone prices of P3,000,
P4,000, and P5,000, respectively,for eahc o smaller tasks if done separately. How may performance obligations exist in
this contract?
a. 0 c. 2
b. 1 d. 3

C 3. DJ Builders Construction builds luxury houses in remote areas. On June 1,20x6, the company si build a house
in an undeveloped section of a mountainside, and received P2million in advance complete the project, the company
must construcct a pathway leading to the building lot, clear and construct a wooden house. Normally, the company
would change P 400,000, P 1,400,000, respectively, for each of these tasks if done separately. Given the information
above, how man obligations are included in this contract?
a. 0 c. 2
b. 1 d. 3
 Mediocre Inc. has entered into a very profitable fixed price contract for constructing a high-ris
period of three years. It incurs the following costs relating to the contract during the first year:
· Cost of material = 2.5 million
· Site labor cost = 2.0 million
· Agreed administrative costs as per contract to be reimbursed by the customer = 1milliion
· Depreciation of the plant used for the construction = 0.5million
· Marketing costs for selling apartments, when they are ready = 1.0 million

Total estimated cost of the project = 18 million

the percentage of completion of this contract of the year-end is:
a. 33 1/3% (=6.0/ 18.0) c. 25% (=4.5/18.0
b. 27% (=4.5/16.5) d. 39% (7.0/18)

B 5. Manroe Construction Company uses the percentage-of-completion (over time) method of accounting. In
20x4, Monroe began work on a contract it had received which provided for a
contract price of P 15,000,000. Other details follow:

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