As at 1 January 2022, HK Wave Limited started a long-term contract to construct a warehouse...

 

Transcribed Image Text:

As at 1 January 2022, HK Wave Limited started a long-term contract to construct a warehouse with a contract price of $1,500,000. The construction project will be completed on 31 December 2024. Costs for the three years are shown as below: 2022 $200,000 800,000 2023 $600,000 600,000 2024 $1,100,000 - 0 - Actual costs to date Estimated costs to complete the project The Company's financial year-end is 31 December. Required: (Round the percentage of completion, if any, to 2 decimal places and round the answers to the nearest dollar.) (a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (6 marks) (b) Using the cost-recovery method, compute the estimated gross profit that would be recognized during each year of the construction period. (3 marks) (c) Assume the estimated costs to complete the project (in 2023) changed from $600,000 to $811,765, what will be the estimated gross profit /loss that would be recognized during each year (using the percentage-of-completion method)? (8 marks) As at 1 January 2022, HK Wave Limited started a long-term contract to construct a warehouse with a contract price of $1,500,000. The construction project will be completed on 31 December 2024. Costs for the three years are shown as below: 2022 $200,000 800,000 2023 $600,000 600,000 2024 $1,100,000 - 0 - Actual costs to date Estimated costs to complete the project The Company's financial year-end is 31 December. Required: (Round the percentage of completion, if any, to 2 decimal places and round the answers to the nearest dollar.) (a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (6 marks) (b) Using the cost-recovery method, compute the estimated gross profit that would be recognized during each year of the construction period. (3 marks) (c) Assume the estimated costs to complete the project (in 2023) changed from $600,000 to $811,765, what will be the estimated gross profit /loss that would be recognized during each year (using the percentage-of-completion method)? (8 marks)

Answer rating: 100% (QA)

H K Wave Ltd started a long term project to construct a warehouse for a contract price of 1500000 The project lasts for 3 years and we are given the c... View the full answer