Problem 01: On July 1, 2020, ABC Construction Corp. contracted to build an office building for XYZ, Inc. for a total contract price of P975,000. 2020 2021 2022 Contract cost incurred to date 75,000 600,000 1,050,000 Estimated costs to complete the contract 675,000 400,000 - Billings to XYZ, Inc. 150,000 550,000 275,000 Requirements: a. Prepare journal entries on 2020, 2021 and 2022 under percentage of completion method. b. Prepare journal entries on 2020, 2021 and 2022 under zero-profit method. Problem 02: EFG Construction was recently awarded a P6,730,000 contract to construct a trade center for Ayala Inc. EFG Construction estimates it will take 46 months to complete the contract. The company uses the percentage of completion method to estimate profits. (use two decimal places for the percentage of completion). Example 62.48% The following information details the actual and estimated costs for the year 2018-2021: Year Actual Cost Each Year Estimated Cost to Complete 2018 3, 120,000 3,264,000 2019 1,584,000 1,800,000 2020 1,152,000 912,000 2021 1,080,000 - Requirements: Prepare journal entries on 2018, 2019, 2020 and 2021. Problem 03: On January 1, 2021, Matibay Development Corporation (MDC) entered into a contract with Company B to construct a new corporate headquarters on land owned by Company B. Contractor MDC determines that control of the building is passed to B as it is constructed. Therefore, the performance obligation is satisfied over time. The contract price is P5,000,000, but that amount will be reduced or increased depending on when construction of the building is completed. For each day before December 31, 2023 that the building is completed, the promised consideration will increase by P25,000. For each day after December 31, 2023 that the building is incomplete, the promised consideration will be reduced by P25,000. The parties have also agreed that, when the building is complete, it will be inspected and assigned a green building certification level. If the building achieves the certification level specified in the contract, Contractor MDC will be entitled to an incentive bonus of P200,000. On December 31, 2021, MDC determined that the "expected value" better predicts the variable consideration it will receive regarding the early completion or delay of the construction because of the different outcomes possible based on MDC's current construction schedule and its experience with past projects. MDC estimates that it is 50% likely to complete the project 10 days ahead of schedule and receive an incentive of P250,000, 25% likely to complete the project on time and receive no incentive and 25% likely to complete the project five days past schedule and incur a P125,000 penalty. As of the same date, on the other hand, MDC determined that the "most likely amount" is the better predictor to estimate the variable consideration associated with the green building certification bonus because there are only two possible outcomes (P200,000 or PO). Based on its history of completing building projects that achieve the green building certification level specified in the contract and the absence of factors that may indicate the criteria will not be met, MDC decided to include the bonus in the transaction price. On December 31, 2022, MDC did not change its estimate with respect to certification bonus but after evaluation evaluating construction completed to date remaining project schedule, Contractor MDC determines it is now 75% likely to complete the project 10 day ahead of schedule and receive an incentive of P250,000 and 25% likely to complete the project on time and receive no incentive bonus. The following construction costs were provided by MDC for the years ended December 31, 2021 and 2022: December 31, 2021 December 31, 2022 Costs incurred during the year P2,400,000 P750, 000 Estimated costs to complete at the end of the year P1,600,000 P1,350,000 Dnnll:unmnnfu Drnn-n-n innrnnl nun-in:- \")an uni] "moo