Reference no: EM132943231

On January 1, 2021 a contractor enters into a construction contract which includes a fixed contract price of P12,000 to build a bridge. The contractor's initial estimate of contract costs is P8,000 over a three-year construction period. The contractor has a December 31 year-end.

On December 31, 2021 the contractor's estimate of total contract costs is still P8,000. However, by the end of 2022 the contractor's estimate of contract costs increased to P10,000, excluding the variation below.

• In 2022 the customer and the contractor agree to a variation resulting in an increase in contract revenue of P200 and estimated additional contract costs of P150.
• Actual cumulative costs incurred to the end of 2021, 2022 and 2023 (the end of the contract) including the costs of the variation are P3,000, P7,105 and P10,050 respectively.
• At the end of 2021, 2022 and 2023 the customer paid the contractor progress billings of P5,000, P3,000 and P4,200 respectively. The contractor determines the stage of completion of the contract by calculating the proportion that contract costs incurred for work performed to date bear to the latest estimated total contract costs.

Problem 1: How much is the profit (loss) for the year 2021, 2022 & 2023, respectively?