On September 1 2001 ABC co. enters into a contract with a customer to remodel a plants electrical wiring and install a new generator for a total consideration of 12 million. 30 modeling and installation are treated as single performance obligation satisfied overtime read.

The expected contract cost are as follows:

Generator 4 million

Other cost 5 million

Expected total contract cost 9million

Additional information:

ABC Co. uses the cost to cost method in measuring its progress towards the complete satisfaction of the performance of the obligation.

ABC Corporation incurs total cost of 6 million in 20x1, including the cost of generator.

Customer obtains control of the generator when it is delivered to the site in December 2001. However, the generator will not be installed until March 20x2.

ABC Corporation regards the cost of the generator as significant in relation to the expected total contracts cost. (I.e. 4M9M= 44.44%)

Although ABC Co. acted as a principal in procuring the generator, ABC co. that involve designing or manufacturing generator.

1. How much revenue is recognized in 2001?
2. How much profit is recognize from the contract in 2001?

Conrado Motors sells locally manufactured Jeepney on the installment basis.

The information presented below related operation during the past 3 years.

201220112010

Cost of installment sales. 8,765,000.7,700,0004,950,000

December 31 balance:

Installment receivable 20129,728,000

Installment receivable 20113,025,000.8,387,500

Installment 2010 1,512,500. 4,812,500

Gross profit rate.32%.40%. 28%

Conrado uses installment method of accounting. What would the company report as total realized gross profit of the year 2012?

a.1,012,000

b.3,044,250

c.3,753,750

d.6,993,250

. In 2015 ACE BUILDERS agreed to construct a commercial building at a price of 3,750,000 ACE BUILDERS uses the percentage of completion method. The information relating to the cost and buildings for the contract were as follows:

2015 2016 2017

Cost incurred to date 1,050,0002,250,0002,943,750

Estimated cost yet to be incurred1,950,000750,000

Customers billings to date 562,5001,500,000 3,750,000

Collections of billings to date 450,0001,200,0003,525,000

How much is the excess of the construction in progress over progress billings or progress billings over construction in progress in ACE's December 31, 2016 balance sheet?

a.1,312,500

b.2,062,500

c.Answer not given