In 20x1, Chili Peppers Co. started work on three contracts. Information of the contracts is shown below:



Contract 1 Transaction price - 500,000 Costs incurred - 375,000 Estimated costs to complete - 0

Contract 2 Transaction price -700,000 Costs incurred - 100,000 Estimated costs to complete - 400,000

Contract 3 Transaction price - 250,000 Costs incurred - 100,000 Estimated costs to complete - 100,000



The performance obligations of Chili Peppers Co. in all of the contracts are satisfied over time. Chili Peppers Co. uses the cost-to-cost method to measure its progress in the contracts.

 How much is the total revenue recognized from the contracts 20x1?

Information on Sunny Day Construction Firm's three-year construction contract with a customer is shown below:

Contract price                                               ₱9,000,000      

  Estimated costs at contract inception           ₱8,000,000



Information on actual costs, billings and collections during construction period:



Actual costs incurred per year 20x1 - 1,944,000 20x2 - 5,232,000 20x3 - 1,844,000

Estimated costs to complete 20x1 - 6,156,000 20x2 - 2,024,000 20x3 - 0

Billings 20x1 - 1,800,000 20x2 - 4,950,000 20x3 - 2,250,000

Collections 20x1 - 1,620,000 20x2 - 4,455,000 20x3 - 2,925,000



Sunny Day uses the percentage of completion (based on costs) in recognizing revenues and profits from the contract.



How much net profit (loss) is recognized in 20x2?

Answer rating: 100% (QA)

To determine the net profit loss recognized in 20x2 for Sunny Day Construction Firms threeyear const... View the full answer