PROBLEM 1

On January 1, 2022, Micho Const Company was contracted to build an office building for Pelo Company for a total
contract price of P12,400,000. Estimated total contract cost are P11,000,000. Costs incurred to date related to the
project are as follows:

Advances made to subcontractors P300,000

Borrowing cost incurred during the construction period 410,000
Cost of direct materials used 750,000
Cost of direct labor including supervision of 300,000 620,000
Cost incurred in obtaining the contract previously written off 260,000
Depreciation of equipment used on the project 490,000
Payroll of technical, blueprint and design dept allocated to contract 330,000
Insurance cost (1/4 is for the project) 880,000
Costs of contracted R & D 430,000
Depreciation of idle equipment not used on a particular project 230,000
Selling costs 240,000
General and admin expenses (chargeable to customer) 180,000

Using the POC method, how much is the realized gross profit to be recognized in year 2022?

PROBLEM 2
On January 1, 2022, Aivan Company entered into a contract to construct a building for a customer. Aivan Co
performance obligation will be satisfied over time. The Company uses the input method based on costs to measure
its progress on the contract. The contract price is 10,500,000. Information on the construction is provided below:

2022 2023 2024

Contract costs incurred each year P2,760,000 P3,540,000 P500,000
Billing each year 50% 30% 20%
Collections on billings each year 90% 90% balance
Estimated costs to complete 4,140,000 700,000 ---

Using the cost to cost method, compute for the revenue, contruction costs and gross profits in 2022, 2023, 2024?

Using the cost recovery method, compute for the revenue, contruction costs and gross profits in 2022, 2023, 2024?
PROBLEM 3
In 2022, Fluuuor Builders Inc started on a new project Shell Investa on a P2,000,000 fixed price contract.
Information related to the project shown below:

2022 2023 2024

Cost incurred to date P400,000 P1,650,000 P2,040,000

Estimated costs to complete 1,200,000 550,000 -

The project was completed in 2024.

Using the cost to cost method, compute for the revenue, contruction costs and gross profits in 2022, 2023, 2024?

Using the cost recovery method, compute for the revenue, contruction costs and gross profits in 2022, 2023, 2024?