has a centract to build a building for S 100,000 with an estimeted time to compl
ID: 2330440 • Letter: H
Question
has a centract to build a building for S 100,000 with an estimeted time to completion of three years. A relisble te for the project would be 5 60,000. ls the first year project, AAA incuered conts tetalieg $ 2400 7 AAA Under the percentage of completion method AAA will repons a first year proft of a) $ 16,000 b) 536,000 c) 5 40,000 d) 5 76,000 48-Ali nc.chngesitsffethodorvalueiorlofnventoriesfrurn weieiled aver genetholistrsii,maapro method. ABC Inc. should account for this change tc a) A change in estimate and account for it peospectively b) A change in accounting polley and for prospectivelby c) A change in accounting policy and account for it retrospectively d) Account for it as a conrection of an error and account for in retrospectively 49- Which of the following stacements about accounting for reverues or coss under the percentage of completion methed is RUE? a) All current and estimated future costs are charges 0 as an expenses in the first year of the project b) The costs that can be charged against income are calculated by multiplying the total edimated cest by the proportien of revenues paid thus far to the total essimoned revenues c) Revenues can be recognized based en engincering estimates of the sroportion of work completed d) No costs can be charged off until all revcnues are received 50- What is the objective of financial statements according to the IASB Framework? a) To provide information about the financial position, performanse, and changes in financial position of an entity thor is uscful to a wide range of users in making coonomic decisions b) To prepare and present a balance sheet, an income statement, a cash flow sbtement, a statement of changes in oquity c) To prepare and present comparable, relevant, reliable, and undernstandsble information to iavestors and creditors d) To prepare financial statements in accordance with all applicable Sandards and Interpretations 51 - An investment property should be measured initially at a) Cost b) Cost less accumulated impairment losses c) Depreciable cost less accumulated impairment losses d) Fair value less accumulated impairment losses 52 -Gross ballings for merchandise sold by ABC Inc to is customers last year smounted to $12,720.000 sales reurts and allowances were S 270,000, sales discounts were S 175,000, and freight-out was $140,000. Net sales last year for ABC c a) $ 12,720,000 b) S 12,450,000 c) $ 12,275,000 d) $ 12,135,000 A reimburses 50% of at employees' post-employment medical costs if the employee provides +25 years of service. The obligation is 53- p) A shor-term employee benefie b) A post- employment benefit c) Other long-term employee benefit d) A termination benefitExplanation / Answer
47)
% of completion = $24,000/$60,000 = 40%
First year profit:
= Revenue to be recognized – costs incurred
= $100,000×40%-$24,000
= $40,000-$24,000
= $16,000
Hence, correct option is (A) $16,000
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