How much is the construction revenue recognized

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Problem - Dragon Construction was recently awarded a P14,000,000 contract to construct a shopping mall for Ayala Malls. Dragon Construction estimates it will take 42 months to complete the contract. During 2018, the contract price was increased by P100,000 due to expected increase in construction costs. No adjustment to revenue was agreed by the parties after that. The company uses the cost-to-cost method to estimate profits. The following information details the actual and estimated costs for the year 2017 - 2020:

Year

Actual Cost-Current year

Estimated Cost to Complete

2017

P6,450,500

P6,849,500

2018

3,413,500

3,836,000

2019

2,883,600

1,416,400

2020

1,400,000

0

Required - Using the percentage of completion method, how much is the construction revenue recognized in 2017?

Reference no: EM132742385

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