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What the profit that should be recognized is

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On January 1, 2018, Star Construction Company entered into a contract with KC Company to build a studio house. At that time, Star Company estimated that it would take three years and would cost them P7.2M to complete the project. The contract price is P9.2M. During 2019, Star Construction Company incurred P2,392,000 in construction costs but due to rising materials and labor costs, the outcome of the contract cannot be estimated reliably in 2019. However, at the end of 2020, Engr. Richard was certain that the total costs of the project will not exceed P9.2M. KC Company was billed 25% of the contract price in 2019.

Problem 1: The profit that should be recognized in 2019 is:

A. P664,444
B. (P92,000)
C. PO
D. P2.3M

Reference no: EM132945082

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