On September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a plant's electrical wirings and install a new generator for a total consideration of P10M. The remodeling and the installation are treated as a single performance obligation satisfied over time. The expected contract costs are as follows: Generator Other costs Expected total contract costs 2,500,000 4,000,000 6,500,000 VERSITY Additional information: • ABC Co. uses the cost-to-cost method in measuring its progress towards the complete satisfaction of the performance obligation. ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator. The customer obtains control of the generator when it is delivered to the site in December 20x1. However, the generator will not be installed until March 20x2. ABC Co. regards the c cost of the generator as significant in relation to the expected total contract costs. heating during examinations, quizzes or plagiarism in connection • • Although ABC Co. acted as a principal in procuring the generator, ABC Co. is not involved in designing or manufacturing the generator. censure to suspension with invalidation of grade; 3rd violation-suspension to dismissal/ non-readmission with invalidation of grade How much profit is recognized from the contract in 20x1?
On September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a plant's electrical wirings and install a new generator for a total consideration of P10M. The remodeling and the installation are treated as a single performance obligation satisfied over time. The expected contract costs are as follows: Generator Other costs Expected total contract costs 2,500,000 4,000,000 6,500,000 VERSITY Additional information: • ABC Co. uses the cost-to-cost method in measuring its progress towards the complete satisfaction of the performance obligation. ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator. The customer obtains control of the generator when it is delivered to the site in December 20x1. However, the generator will not be installed until March 20x2. ABC Co. regards the c cost of the generator as significant in relation to the expected total contract costs. heating during examinations, quizzes or plagiarism in connection • • Although ABC Co. acted as a principal in procuring the generator, ABC Co. is not involved in designing or manufacturing the generator. censure to suspension with invalidation of grade; 3rd violation-suspension to dismissal/ non-readmission with invalidation of grade How much profit is recognized from the contract in 20x1?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On September 1, 20x1, ABC Co. enters into a contract with a customer to remodel a
plant's electrical wirings and install a new generator for a total consideration of P10M.
The remodeling and the installation
single performance obligation
treated as a
satisfied over time.
The expected contract costs
Generator
LO
as follows:
Other costs
Expected total contract costs
2,500,000
4,000,000
6,500,000
VERSITY
Additional information:
• ABC Co. uses the cost-to-cost method in measuring its progress towards the complete
satisfaction of the performance obligation.
• ABC Co. incurs total costs of P4,000,000 in 20x1, including the cost of the generator.
The customer obtains control of the generator when it is delivered to the site in
December 20x1. However, the generator will not be installed until March 20x2.
•
• ABC Co. regards the cost of the generator as significant in relation to the expected
total contract costs-eating during examinations, quizzes or plagiarism in connection
.
Although ABC Co. acted as a principal in procuring the generator, ABC Co. is not
involved in designing or manufacturing the generator, censure to
suspension with invalidation of grade; 3rd violation- suspension
to dismissal/ non-readmission with invalidation of grade
How much profit is recognized from the contract in 20x1?
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