On January 1, 2020, Mechathon Inc. accepted a long-term construction contract to build a condominium with a
Question:
On January 1, 2020, Mechathon Inc. accepted a long-term construction contract to build a condominium with a total contract price of P27,000,000. For the two years ended December 31, 2020 and 2021, the following data were provided by Mechathon Inc.:
12/31/2020 | 12/31/2021 | |
General administration cost which is not reimbursable under the contract for the year | P1,800,000 | P2,700,000 |
Site labor costs including site supervision for the year | 3,150,000 | 4,500,000 |
Selling costs for the year | 3,600,000 | 900,000 |
Cost of direct materials used in construction for the year | 2,250,000 | 3,060,000 |
Estimated cost to complete the condominium at year end | 3,600,000 | 3,240,000 |
Mechathon Inc. billed its client 30% during 2020 and 40% during 2021. The outcome of the construction contract can be estimated reliably.
What is the balance of the Construction in Progress in excess of Progress Billings / (Progress Billings in excess of Construction in Progress) to be presented in the Mechathron’s December 31, 2021 Statement of Financial Position?
Expert Answer:
Answer The balance of Construction ongoing in greater than Progress Billings is P2700000 Asset 12312... View the full answer
