Question: Freemont Inc. started work on a construction contract in 2015. The contract price is P40 million. However, if the cumulative inflation rate exceeds 10%,

Freemont Inc. started work on a construction contract in 2015. The contract price is P40 million. However, if the cumulative inflation rate exceeds 10%, the contract price shall be increased by 20%. Cost escalations on the contract are probable as to recovery. The following information is presented. What is the realized gross profit for 2016? * 2015 P9,600,000 Costs incurred to date Estimated cost to complete Cumulative inflation rate 14,400,000 15% O A. P5,600,000 B. P8,400,000 C. P9,600,000 D. P18,000,000 2016 P18,000,000 6,000,000 22%

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