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LTCC Problem 2 Complete Journal Entries

This document shows journal entries for recognizing revenue and expenses from long-term construction contracts over multiple years using different accounting methods. In 2021-2023, the company recognizes contract revenue, expenses, billings, and cash collections. It presents statement of financial position and statement of comprehensive income accounts under the input, output, and cost recovery methods.

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Merliza Jusayan
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321 views

LTCC Problem 2 Complete Journal Entries

This document shows journal entries for recognizing revenue and expenses from long-term construction contracts over multiple years using different accounting methods. In 2021-2023, the company recognizes contract revenue, expenses, billings, and cash collections. It presents statement of financial position and statement of comprehensive income accounts under the input, output, and cost recovery methods.

Uploaded by

Merliza Jusayan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Problem 2 (input method)

2021 2022 2023


Contract Costs (Asset) 35,000,000.00 20,000,000.00 30,000,000.00
Cash 35,000,000.00 20,000,000.00 30,000,000.00
To recognize recognition of contract costs as asset

Construction in Progress 43,750,000.00 25,000,000.00 31,250,000.00


Revenue from Construction Contract 43,750,000.00 25,000,000.00 31,250,000.00
To recognize revenue for 2021

Costs of Construction Contract (P/L) 35,000,000.00 20,000,000.00 30,000,000.00


Contract Costs (Asset) 35,000,000.00 20,000,000.00 30,000,000.00
To record amortization of contract costs (matching principle)

Accounts Receivable 16,000,000.00 28,000,000.00 56,000,000.00


Progress Billings 16,000,000.00 28,000,000.00 56,000,000.00
To record billing to customer

Cash 14,000,000.00 25,000,000.00 61,000,000.00


Accounts Receivable 14,000,000.00 25,000,000.00 61,000,000.00
To record collections from customers

Progress Billings 100,000,000.00


Construction in Progress 100,000,000.00
To record closing of progress billings and construction in progress

SFP (View 1)
Current Assets
Accounts Receivable 2,000,000.00 5,000,000.00 -

Construction in Progress 43,750,000.00 68,750,000.00


Progress Billings to date - 16,000,000.00 - 44,000,000.00
Contract Asset (Contract Liability) 27,750,000.00 24,750,000.00 -

SCI
Revenue from construction contract 43,750,000.00 25,000,000.00 31,250,000.00
Costs of construction contract - 35,000,000.00 - 20,000,000.00 - 30,000,000.00
Realized gross profit 8,750,000.00 5,000,000.00 1,250,000.00
Problem 2 (input method)
Alternative entries (PFRS 15) [use contract asset/contract liability instead of CIP and PB]
2021 2022 2023
Contract Costs (Asset) 35,000,000.00 20,000,000.00 30,000,000.00
Cash 35,000,000.00 20,000,000.00 30,000,000.00
To recognize recognition of contract costs as asset

Contract Asset 43,750,000.00 25,000,000.00 31,250,000.00


Revenue from Construction Contract 43,750,000.00 25,000,000.00 31,250,000.00
To recognize revenue for 2021

Costs of Construction Contract (P/L) 35,000,000.00 20,000,000.00 30,000,000.00


Contract Costs (Asset) 35,000,000.00 20,000,000.00 30,000,000.00
To record amortization of contract costs (matching principle)

Accounts Receivable 16,000,000.00 28,000,000.00 56,000,000.00


Contract Asset 16,000,000.00 28,000,000.00 56,000,000.00
To record billing to customer

Cash 14,000,000.00 25,000,000.00 61,000,000.00


Accounts Receivable 14,000,000.00 25,000,000.00 61,000,000.00
To record collections from customers

SFP (View 1)
Current Assets
Accounts Receivable 2,000,000.00 5,000,000.00 -
Contract Asset (Contract Liability) 27,750,000.00 24,750,000.00 -

SCI
Revenue from construction contract 43,750,000.00 25,000,000.00 31,250,000.00
Costs of construction contract - 35,000,000.00 - 20,000,000.00 - 30,000,000.00
Realized gross profit 8,750,000.00 5,000,000.00 1,250,000.00
Problem 2 (cost recovery method)

2021 2022 2023


Contract Costs (Asset) 35,000,000.00 20,000,000.00 30,000,000.00
Cash 35,000,000.00 20,000,000.00 30,000,000.00
To recognize recognition of contract costs as asset

Construction in Progress 35,000,000.00 20,000,000.00 45,000,000.00


Revenue from Construction Contract 35,000,000.00 20,000,000.00 45,000,000.00
To recognize revenue for 2021

Costs of Construction Contract (P/L) 35,000,000.00 20,000,000.00 30,000,000.00


Contract Costs (Asset) 35,000,000.00 20,000,000.00 30,000,000.00
To record amortization of contract costs (matching principle)

Accounts Receivable 16,000,000.00 28,000,000.00 56,000,000.00


Progress Billings 16,000,000.00 28,000,000.00 56,000,000.00
To record billing to customer

Cash 14,000,000.00 25,000,000.00 61,000,000.00


Accounts Receivable 14,000,000.00 25,000,000.00 61,000,000.00
To record collections from customers

Progress Billings 100,000,000.00


Construction in Progress 100,000,000.00
To record closing of progress billings and construction in progress

SFP (View 1)
Current Assets
Accounts Receivable 2,000,000.00 5,000,000.00 -

Construction in Progress 35,000,000.00 55,000,000.00


Progress Billings to date - 16,000,000.00 - 44,000,000.00
Contract Asset (Contract Liability) 19,000,000.00 11,000,000.00 -

SCI
Revenue from construction contract 35,000,000.00 20,000,000.00 45,000,000.00
Costs of construction contract - 35,000,000.00 - 20,000,000.00 - 30,000,000.00
Realized gross profit - - 15,000,000.00
Problem 2 (output method)

2021 2022 2023


Contract Costs (Asset) 35,000,000.00 20,000,000.00 30,000,000.00
Cash 35,000,000.00 20,000,000.00 30,000,000.00
To recognize recognition of contract costs as asset

Construction in Progress 40,000,000.00 25,000,000.00 35,000,000.00


Revenue from Construction Contract 40,000,000.00 25,000,000.00 35,000,000.00
To recognize revenue for 2021

Costs of Construction Contract (P/L) 32,000,000.00 20,000,000.00 33,000,000.00


Contract Costs (Asset) 32,000,000.00 20,000,000.00 33,000,000.00
To record amortization of contract costs (matching principle)

Accounts Receivable 16,000,000.00 28,000,000.00 56,000,000.00


Progress Billings 16,000,000.00 28,000,000.00 56,000,000.00
To record billing to customer

Cash 14,000,000.00 25,000,000.00 61,000,000.00


Accounts Receivable 14,000,000.00 25,000,000.00 61,000,000.00
To record collections from customers

Progress Billings 100,000,000.00


Construction in Progress 100,000,000.00
To record closing of progress billings and construction in progress

SFP (View 1)
Current Assets
Accounts Receivable 2,000,000.00 5,000,000.00 -

Construction in Progress 40,000,000.00 65,000,000.00


Progress Billings to date - 16,000,000.00 - 44,000,000.00
Contract Asset (Contract Liability) 24,000,000.00 21,000,000.00 -

Contract Costs (Asset) 3,000,000.00 3,000,000.00 -

SCI
Revenue from construction contract 40,000,000.00 25,000,000.00 35,000,000.00
Costs of construction contract - 32,000,000.00 - 20,000,000.00 - 33,000,000.00
Realized gross profit 8,000,000.00 5,000,000.00 2,000,000.00

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