ABC Co. a private contractor, wins a bid to construct a railway for the government. The...

 

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ABC Co. a private contractor, wins a bid to construct a railway for the government. The terms of the arrangement are as follows: Construct a road-completing construction within a year; Maintain and operate the road for four years. Resurface the road when the original surface has deteriorated below specified condition. The operator estimates that it will have to undertake the resurfacing at the end of year 3. The operator collects toll fees of P200,000 per year. The contract ends in year 5. The operator estimates that the resurfacing expenditure increases by P5,000 for each year that the road is used. The appropriate discount rate is 10%. At contract inception, ABC Co. identifies a single performance obligation for construction services. ABC Co. makes the following estimates: Construction Service Operation Services Road Resurface YEAR 1 2-5 3 CONTRACT COST 200,000 15,000 10,000 Stand Alone Selling Price Forecast cost + 25% N/A N/A At the start of year 1, ABC Co. obtains a 4-year, 10% P200,000 bank loan to help finance the arrangement. The principal and interest on the loan matures in lump sum. Compute for the net income for year 3. ABC Co. delivered 150 portable gas stoves to DEF Co. on consignment. These stoves cost P2,700 each and could be sold for P4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that ABC Co. would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others, the following information: Advertising P6,750; Delivery Expense P3,375 and Commission P10,135. How much is the amount remitted by DEF to ABC for the first month? ABC Co. a private contractor, wins a bid to construct a railway for the government. The terms of the arrangement are as follows: Construct a road-completing construction within a year; Maintain and operate the road for four years. Resurface the road when the original surface has deteriorated below specified condition. The operator estimates that it will have to undertake the resurfacing at the end of year 3. The operator collects toll fees of P200,000 per year. The contract ends in year 5. The operator estimates that the resurfacing expenditure increases by P5,000 for each year that the road is used. The appropriate discount rate is 10%. At contract inception, ABC Co. identifies a single performance obligation for construction services. ABC Co. makes the following estimates: Construction Service Operation Services Road Resurface YEAR 1 2-5 3 CONTRACT COST 200,000 15,000 10,000 Stand Alone Selling Price Forecast cost + 25% N/A N/A At the start of year 1, ABC Co. obtains a 4-year, 10% P200,000 bank loan to help finance the arrangement. The principal and interest on the loan matures in lump sum. Compute for the net income for year 3. ABC Co. delivered 150 portable gas stoves to DEF Co. on consignment. These stoves cost P2,700 each and could be sold for P4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that ABC Co. would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others, the following information: Advertising P6,750; Delivery Expense P3,375 and Commission P10,135. How much is the amount remitted by DEF to ABC for the first month?

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ABC Co Construction of Road Year 1 Contract cost for construction service P200000 Year 25 Contract cost for operation service P15000 per year Year 3 C... View the full answer