Problem $12$: XY Constructions began construction work under a three year

contract. The contract price was P$700,000.$ XY uses the percentage of completion

method for financial accounting purposes. The financial statement presentation

relating to this contract at December $31,2020$ is presented below:

Balance sheet

Income Statement

Income $($before tax$)$ on the contract recognized in $2020,17,500$

The total estimated cost is:

a$.$ P$140,000$

c$.$ P$656,250$

b$.$ P$560,000$

d$.$ P$700,000$

Problem $13$: Ivan Inc. Is constructing a skyscraper in the heart of Manila and has

signed a fixed price two year contract for P$21,000,000$ with the local authorities. It

has incurred the following cost relating to the contract by the end of first year:

At the end of first year, it has estimated cost to complete the contract P$9$ million.

What gross profit or loss from the contract should Ivan recognize at the end of the

first year?

a$.P1,500,000$

c$.P1,000,000$

b$.P1,050,000$

d$.P1,280,000$