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WorksheetsACC 311 - Long-term Construction Contracts
Total questions: 14
Worksheet time: 25mins
In computing the percentage of completion ratio, under the cost-to-cost method, actual costs incurred should exclude:
costs of materials used in construction
costs of hiring equipment
costs of design and technical assistance
costs of materials purchased in advance
The excess of the Construction in Progress account over the Contract Billings is treated as:
current asset
current liability
other asset
noncurrent liability
Before the year of completion, under the percentage of completion method, the year-end balance of the Construction in Progress account equal to:
cost incurred to date
cost incurred this year
cost incurred to date plus gross profit to date
gross profit earned to date
Under the zero-profit method, (a) should not be recognized until the final year or year of completion.
Which of the following does not belong to the group?
insurance
expected warranty cause
claims from third parties
construction overheads
Revenue is recognized each year in both methods (Percentage of Completion and Zero-profit Method).
True
False
It depends
hala di ko sure
Before the year of completion, under the zero-profit method, the year-end balance of the Construction in Progress account is equal to:
cost incurred to date
cost incurred this year
cost incurred to date plus gross profit earned to date
gross profit earned to date
Because of some specifications posed by the customer that a contractor cannot perform, the process of (a) is usually being entered into.
Whether Percentage of Completion or Zero-profit Method is used, it will ALWAYS result to the same total gross profit.
True
False
It depends
ano nga ba?
This is the accounting framework/standard that deals with the long-term construction contracts.
(a)
BebeTime Construction has consistently used the percentage-of-completion method of recognizing income. In 2021, BebeTime started work on a P3,000,000 fixed-price construction contract. The accounting records disclosed the following data for the year ended December 2021:
Costs incurred 930,000
Estimated cost to complete 2,170,000
Progress billings 1,100,000
Collections 700,000
How much loss should BebeTime have recognized in 2021?
230,000
100,000
30,000
0
LoveKo Incorporated has consistently used the percentage-of-completion method of accounting for their contracts. In 2020, LoveKo started work on a 9,000,000 fixed-price construction contract that was completed in 2021. The company's accounting records disclosed the following:
cumulative contract costs incurred (2020) 3,900,000
cumulative contract costs incurred (2021) 6,300,000
estimated total costs at completion (2020) 7,800,000
estimated total costs at completion (2021) 8,100,000
How much gross profit would LoveKo have recognized on this contract for the year 2021?
700,000
600,000
300,000
100,000
LoveKaBa Company began a construction project on a building for 3,000,000. The project was completed during 2021. The accounting records disclosed the following:
Progress billings during the year (2020) 1,100,000
Progress billings during the year (2021) 1,900,000
Cost incurred during the year (2020) 900,000
Cost incurred during the year (2021) 1,800,000
Estimated cost to complete (2020) 1,800,000
What is the balance of construction in progress account at the end of 2020 under the percentage of completion method?
(a)
BabyLove Company has consistently used the POC method. On January 12, 2020, BabyLove began work on a 6,000,000-construction contract. At the beginning of the contract, the estimated cost of construction was 4,500,000.
The following data relate to the progress of the contract:
Income recognized at December 31, 2020 600,000
Cost incurred from Jan. 12, 2020 thru Dec. 31, 2021 3,600,000
Estimated cost to complete at Dec. 31, 2021 1,200,000
How much gross profit should BabyLove recognize for the year ended December 31, 2021?
(a)
