Problem Orange Construction was recently awarded a P14,000,000 contract to construct a shopping mall for SM...

 

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Problem Orange Construction was recently awarded a P14,000,000 contract to construct a shopping mall for SM Group. Orange Construction estimates it will take 42 months to complete the contract. During 2018, the contract price was increased by P100,000 due to expected increase in construction costs. No adjustment to revenue was agreed by the parties after that. The company uses the cost-to-cost method to estimate profits. The following information details the actual and estimated costs for the year 2017-2020: Year 2017 2018 2019 2010 Actual Cost-Current year P 6,450,500 P 3,413,500 P 2,883,600 P 1,400,000 Estimated Cost to Complete P 6,849,500 P 3,836,000 P 1,416,400 PO Round off percentages to the nearest four decimal places 1.) Using the percentage of completion method, how much is the construction revenue recognized in 2017? 2.) Using the percentage of completion method, how much is the gross loss recognized in 2018, if any? 3.) Using the percentage of completion method, how much is the construction revenue recognized in 2019? 4.) Using the percentage of completion method, how much is the gross profit recognized in 2020, if any? 5.) Using the cost recovery method, how much is the construction revenue recognized in 2019? 6.) Using the cost recovery method, how much is the gross profit recognized in 2020, if any? Problem Orange Construction was recently awarded a P14,000,000 contract to construct a shopping mall for SM Group. Orange Construction estimates it will take 42 months to complete the contract. During 2018, the contract price was increased by P100,000 due to expected increase in construction costs. No adjustment to revenue was agreed by the parties after that. The company uses the cost-to-cost method to estimate profits. The following information details the actual and estimated costs for the year 2017-2020: Year 2017 2018 2019 2010 Actual Cost-Current year P 6,450,500 P 3,413,500 P 2,883,600 P 1,400,000 Estimated Cost to Complete P 6,849,500 P 3,836,000 P 1,416,400 PO Round off percentages to the nearest four decimal places 1.) Using the percentage of completion method, how much is the construction revenue recognized in 2017? 2.) Using the percentage of completion method, how much is the gross loss recognized in 2018, if any? 3.) Using the percentage of completion method, how much is the construction revenue recognized in 2019? 4.) Using the percentage of completion method, how much is the gross profit recognized in 2020, if any? 5.) Using the cost recovery method, how much is the construction revenue recognized in 2019? 6.) Using the cost recovery method, how much is the gross profit recognized in 2020, if any?

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