Hut-to-Palace Ltd. undertook a contract in last year. In the agreement between the Hut- to-Palace Ltd....

 

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Hut-to-Palace Ltd. undertook a contract in last year. In the agreement between the Hut- to-Palace Ltd. and the contractee, there is a clause stating that Hut-to-Palace Ltd. will receive total cost plus 40% as contract consideration. The following are the details of the contract as on 31st March, 2014: Total expenditure to date Estimated further expenditure to complete the contract Value of work certified Cost of work not certified Progress payment received from the contractee 17,64,525 8,38,645 21,07,500 3,11,075 14,75,250 From the above information calculate the (i) Conservative estimate of profit for the management of Hut-to-Palace Ltd. (ii) What would be the estimated profit from the contract if management of Hut-to- Palace Ltd has come to know that the contractee has liquidity crunch and it is not able to pay further payments. Hut-to-Palace Ltd. undertook a contract in last year. In the agreement between the Hut- to-Palace Ltd. and the contractee, there is a clause stating that Hut-to-Palace Ltd. will receive total cost plus 40% as contract consideration. The following are the details of the contract as on 31st March, 2014: Total expenditure to date Estimated further expenditure to complete the contract Value of work certified Cost of work not certified Progress payment received from the contractee 17,64,525 8,38,645 21,07,500 3,11,075 14,75,250 From the above information calculate the (i) Conservative estimate of profit for the management of Hut-to-Palace Ltd. (ii) What would be the estimated profit from the contract if management of Hut-to- Palace Ltd has come to know that the contractee has liquidity crunch and it is not able to pay further payments.

Answer rating: 100% (QA)

i Conservative estimate of profit for the management Cash Received Value of Work of certified 23 ... View the full answer