Reference no: EM132936898

Maria Construction company won the public bidding wherein the contract was awarded starting Jan. 7, 2019, to construct a bridge for a total price of P16,800,000 payable in 5 installments. Terms of payment stipulated that 20% is paid as mobilization fee, the remaining 80% is spread over four quarters of work. The final payment is due ten days after the turnover of the bridge. By December 31, 2019, three quarters of the bridge was completed according to engineer's estimate. The construction company billed the client an amount equivalent to 3 quarters work. By December 31, 2019, a total of P8,400,000 contract costs was incurred. It is estimated that an additional P3,600,000 would be required to complete the construction of the bridge.

Required:

Problem 1) Using cost to cost method, compute for the realized profit for 2019.

Problem 2) Using out-put method - proportional cost approach, (engineer's estimate) determine the balance of the Contract Asset account at Dec. 31, 2019

Problem 3) Using output measure - actual cost approach (engineer's estimate), determine the realized gross profit for 2019.