EX-3. - NEWBEE Construction Company began operations in 2017. Construction activity for 2017 is shown below. NEWBEE uses the cost-recovery method

Contract.....Contract Price........Billings Through 12-31-2017......Collections Through 12-31-2017.............Costs to 12-31-2017........Estimated cost to Complete.

1 .........................P 3,200,000...................P 3,150,000.............................................P 2,600,000..............................................P 2,150,000........................................0.

2.............................3,600,000.......................1,500,000..................................................1,000,000....................................................820,000............................P 1,880,000

3............................3,300,000........................1,900,000.................................................1,800,000.....................................................2,250,000............................1,200,000

1. Which of the following should be shown on the income statement for 2017 related to Contract 1?

2. Which of the following should be shown on the statement of financial position at December 31, 2017 related to Contract 2?

3. Which of the following should be shown on the statement of financial position at December 31, 2017 related to Contract 3?

Problem 2 - VG DEVELOPMENT COMPANY started work on a construction contract in 2015. The contract rice is P 10,000,000. However, if the cumulative inflation reaches or exceeds 25%, the contract price shall be adjusted upward by 10%. Cost escalations on the contract are probable as to recovery. Additional information on the contract is shown below:

Year..............................................................................2015...................................2016.

Costs incurred to date...............................P 2,400,000...................P 4,500,000

Estimated cost at completion.....................6,000,000......................6,000,000

Cumulative inflation rate....................................18%....................................27%

REQUIRED:

1. Compute the percentage of completion during the year 2015

2. Compute for the percentage of completion during the year 2016

3. What is the contract price in 2015?

4. What is the contract price in 2016?

5. What is the realized gross profit in 2015?

6. What is the realized gross profit in 2016?