Reference no: EM133183637
Question - Buffay Enterprises commenced business as building contractors January 1, 2020 with a capital of P10,000,000 paid into bank account. The contractor was awarded a contract on March 31, 2020 to construct a hospital building. The contract price was agreed at P2,000,000.
It was agreed that the contract should be completed by December 31, 2022. The building is being constructed at the premises of customer and contractor has the enforceable right to payment for the full price if the contract is cancelled before completion.
The contractor made the following payments in 2020:
Material purchases P250,000
Wages P130,000
Site supervision P100,000
Lease rentals of hired equipment P26,000
Mobilization costs in shifting plant, equipment and materials to the construction site P21,000
Design and technical assistance P3,000
Other expenses P20,000
Total payments in 2020 = P550,000
Materials inventory at December 31, 2020 amounted to P50,000
During the year, the contractor billed the customer P600,000 against the progress billings. Cash received amounted to P500,000
At December 31, 2020 it was estimated that further cost to this contract would amount to P1,100,000.
During 2021 following payments were made:
Material purchases P475,000
Wages P200,000
Site supervision P100,000
Lease rentals of hired equipment P26,000
Sub-contractors P20,000
Other expenses P4,000
Total payments in 2021 = P825,000
Materials inventory at December 31, 2021 P75,000
During 1997 the contractor billing the customer P1,100,000 against progress billings. Cash received from customer in 2021 amounted to P1,000,000.
At December 31, 2021 the contractor made a fresh estimate of costs of cost to complete the contract. The latest estimates revealed that further costs of P300,000 will be incurred in 2022.
During 2022, the company made following payments
Materials and purchases P165,000
Wages P150,000
Site supervision P50,000
Demobilization P10,000
Total Payments in 2022 = P375,000
Materials un-used was returned to the stores at cost P100,000. Progress billing amounted to P300,000 and cash received was P100,000
Required -
1. Determine the percentage of completion of contract work at end of 2020.
2. Determine the percentage of completion of contract work at end of 2021.
3. Determine the percentage of completion of contract work at end of 2022.
4. Determine the cost to date at end of 2021.
5. Determine the profit to be recognized in comprehensive income at the year ended 2022.
6. Determine the billings to date at end of 2020
7. Determine the billings to date at end of 2021.
8. Give 3 standards that have been superseded by PFRS 15. (Only answer the standard and its number reference).