Contract account

Segun construction limited has signed a fixed contract price at N600 million for the construction of a big estate in Osun. Material costs delivered to site is N150 million, depreciation of plant and equipment used is N25 million, Labour cost amounted to N50 million, selling and promotion cost is N50 million and the estimated cost of completion amounted to N275 million. The estimated total profit of the contract is ___

• N120 million

• N109 million

• N150 million

• N100 million

__ is an advance payment by an employer to the contractee to enable the commencement of the contract work

• Retention fee

• Mobilization fee

• Deferred costs

• Over billing

The following are contract costs in line with IAS 11 except

• Labour cost

• Advertisement cost

• Depreciation of plant and machinery used in the contract

• Materials used in construction

Israel construction plc has signed a fixed price contract at N500 million

The following costs were incurred at the end of the first Accounting period

Wages N25 million, Direct expenses N10 million, Material used N50million, Depreciation of plant and equipment N15 million, cost of work not certified N15 million. The value of work certified amounted to N150 million. The notional profit is ___

• N85 million

• N70 million

• N65 million

• N100 million

__ is the accumulated certifiable cost relating to contract that is yet to be completed

• Cost of work certified

• Cost of work not certified

• Contract work in progress

• Retention fee

Segun construction limited has signed a fixed contract price at N600 million for the construction of a big estate in Osun. Material costs delivered to site is N150 million, depreciation of plant and equipment used is N25 million, Labour cost amounted to N50 million, selling and promotion cost is N50 million and the estimated cost of completion amounted to N275 million. The percentage of completion of the contract is ___

• 25%

• 35%

• 30%

• 45%

Israel plc undertook a contract for building an estate for N200 million. The contract cost of N50 million was incurred up to 31st December, 2023 and expect further cost to complete the construction will be N170 million. How much should be recognized in the statement of profit or loss in 2023?

• N50 million

• N170 million

• N20 million

• N30 million

Answer explanation

Since it is probable that the total costs of N220 million (170+50) will exceed the total revenue. The expected loss of N20 million should be recognized as expenses

Israel construction plc has signed a fixed price contract at N500 million

The following costs were incurred at the end of the first Accounting period

Wages N25 million, Direct expenses N10 million, Material used N50million, Depreciation of plant and equipment N15 million, cost of work not certified N15 million. The value of work certified amounted to N150 million. Cash received is N100 million. The profit taken is ___

• N28,888,889

• N38,888,780

• N29,880,891

• N28,887,676

The following are on the debit side in the contract account except ___

• Wages

• Material issued

• Plant and machinery transferred from site

• Head office overhead charges

Segun construction limited has signed a fixed contract price at N600 million for the construction of a big estate in Osun. Material costs delivered to site is N150 million, depreciation of plant and equipment used is N25 million, Labour cost amounted to N50 million, selling and promotion cost is N50 million and the estimated cost of completion amounted to N275 million. The profit taken of the contract is ___

• N55 million

• N45 million

• N100 million

• N105 million