What is the percentage of completion

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Question 1 - In 2018, SM Residences entered into a 3-year agreement in to construct a condominium project for a contract price of P10,000,000. SM recognizes construction contract under the percentage of completion method. The following balances were found in SM's books:

 

Progress Billings

Accounts Receivable

Construction in Progress

Costs incurred to date

2018

2,000,000

1,000,000

3,500,000

2,800,000

2019

3,000,000

1,200,000

6,500,000

5,500,000

Required - What is the percentage of completion in 2019?

Question 2 - Ayala Homes is a construction company who uses the percentage of completion method in accounting for its income. The company began constructing a building in the year 2019 for a contract price of P5,000,000. For the year ended 2019, the company billed its clients a total of 30% of the contract price. The books of the company show the following balances:

-Costs incurred to date P900,000

-Construction income to date P300,000

Required - How much is the company's contract asset (liability) for the year 2019?

Reference no: EM133046821

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