LTCC - Exam
LTCC - Exam
#__________ Date:_____
2. West Construction Company recognized gross profit to date of P31,500 on its long term project
what has accumulated costs of P61,250. To finish the project, the company estimates that it has
to incur additional cost of P122,500. Billings made were 40% of the contract price.
What is the balance of the Construction in Progress, net of billings?
a. P18,500 current liability
b. P18,550 current asset
c. P50,050 current asset
d. P50,050 current liability
3. The following data pertains to Bell Cos construction jobs, which commenced during 2013.
Project 1 Project 2
What amount of gross profit (loss) would Bell report in 2013 under the zero profit method and
the percentage-of-completion method?
4. State Co. recognizes construction revenue and expenses using the percentage-of-completion
method. During 2012 a single long-term project was begun, which continued through 2013.
Information on the project follows:
2012 2013
a. P50,000
b. P108,000
c. P128,000
d. P228,000
5. Builders Construction, Inc. uses the percentage of completion method in recognizing income. In
2012, Builders Construction Inc. was engaged by SM on a fixed-price contract to build a 4-storey
shopping mall.
On January 1, 2013, a fire damaged the accounting records of Builders Construction, Inc. The
president of the company has contracted you to reconstruct the contract information. The
following data were taken from the salvaged files:
12/31/11 12/31/12
a. 40%
b. 25%
c. 20%
d. 30%
6. Mega Construction Company was awarded a contract to construct a new sewage for MWSS for a
price of P3,250,000. The original estimate of the cost to complete the project was P3,000,000.
The contract provides for periodic progress billings. A final billing equal to 25% of the contract
price is to be made upon final inspection and acceptance by the MWS.
The construction was inspected on August 15, 2011, January 15, 2011 and October 1, 2012 and
the progress billings equal to 25% of the contract price wee made on each of these dates (thus,
75%). The system was completed, and final inspection and acceptance took place on August 21,
2013.
How much is the construction in progress, net of billings in the 2012?
a. P875,000, current liability
b. P2,463,600, current asset
c. P287,500, current liability
d. P62,500, current assets
North Construction Company uses the percentage of completion method of recognizing gross
profit on long term construction contracts. The company started work on two contracts during
2012. Data relating to the two contracts are given below:
In 2013, contract 3 was started for a contract price of P2,700,000. As of December 31, 2013, the
following data are available:
For numbers 9 to 11
In 2011, South Builders agreed to construct a commercial building at a price of P1,000,000. South
Builders uses the percentage of completion method of recognizing revenue on long term
construction projects. The data relating to the projects from 2011 to 2013 are as follows
For numbers 12 to 15
Sin Construction Co. has used the cost-to-cost percentage of completion method of recognizing revenue,
Marc Sin assumed the presidency of the company after the death of his father, Vincent. In reviewing the
records, Marc finds the following information regarding a recently completed building project for which
the total contract was P1,000,000
Marc wants to know how effectively the company operated during the three (3) years on this project and,
since the information is not complete, has asked for answers to the following questions: