Reference no: EM132739063
On January 1, 2020, Mechathon Inc. accepted a long-term construction contract to build a condominium with a total contract price of P27,000,000. For the two years ended December 31, 2020 and 2021, the following data were provided by Mechathon Inc.:
12/31/2020
General administration cost which is not reimbursable under the contract for the year P1,800,000
Site labor costs including site supervision for the year 3,150,000
Selling costs for the year 3,600,000
Cost of direct materials used in construction for the year 2,250,000
Estimated cost to complete the condominium at year end 3,600,000
12/31/2021
General administration cost which is not reimbursable under the contract for the year P2,700,000
Site labor costs including site supervision for the year 4,500,000
Selling costs for the year 900,000
Cost of direct materials used in construction for the year 3,060,000
Estimated cost to complete the condominium at year end 3,240,000
Mechathon Inc. billed its client 30% during 2020 and 40% during 2021. The outcome of the construction contract can be estimated reliably.
Problem 1: What is the balance of the Construction in Progress in excess of Progress Billings / (Progress Billings in excess of Construction in Progress) to be presented in the Mechathron's December 31, 2021 Statement of Financial Position?