Calculation of opportunity cost

Indiana Co. began a construction project in 2018 with a contract price of $161 million to be received when the project is comple

Montano1993 [528]

Answer:

b. Recognized $12.37 million gross profit on the project in 2018.

Explanation:

IFRS-15 that deals with Revenue from Construction Contracts requires companies to follow a 4-step approach to record entries for contract when the performance obligation is satisfied over a period of time. These steps are:

1) Calculate the overall profit

Contract Price - Total Costs ( Incurred + Estimated)

⇒ 161 - 122 (40 + 82) = $39 million.

2) Determine the progress of the contract

(Cost to date / Total cost) * 100

⇒ (40 / 122) * 100 = 32.79%

3) Statement of Profit or Loss (If Profitable)

Revenue (Total Price * Progress) ; (161 * .3279) $52.79

Cost of Sale (Total costs * Progress) ; (122 * .3279) (40)

Gross Profit $12.79

The difference arises of $.42 million is because of rounding, ignore it. We choose the closest option in MCQs, always remember this.

Note: Step 4 is related to Balance Sheet which is not the requirement of this question, so skipped.

Thanks!

4 0

3 years ago

A construction project has been tasked with building a four-lane road from a remote mountain fortress to a major expressway lyin

ELEN [110]

Answer:

A) Whether the strongest donkey can transport the most substantial piece of equipment is the most important.

Explanation:

The decision-making is sorting out, arranging and controlling elements of an administrator. Essential leadership is critical to accomplish the hierarchical objectives/goals inside the given time and spending plan. Necessary guidance is an unavoidable capacity of administrators planned for achieving authoritative objectives.

It is not the demonstration of settling on choices that is so alarming, and it is the vulnerability of the outcomes and repercussions of those choices that we dread the most. Similarly, as nobody is genuinely scared of statures, they terrified of falling. Here, in this issue, we opt out to look forward how much a strongest donkey can transport. It is useless to examine the weakest one.

7 0

3 years ago

Employees who record and are paid for the exact of amount of time spent working are paid on a(n) _____ basis.

jonny [76]

An hourly basis.
hope this helped!!

4 0

3 years ago

Read 2 more answers

What is the primary product focus for the lego company? select one: a. custom sculpture b. recycled plastic c. electronic device

Goryan [66]

Children's construction sets is the primary product focus for the lego company.

What is the strategy of LEGO?

The LEGO Group's mission is to inspire and develop the builders of tomorrow through the power of play.
The LEGO System in Play, with its foundation in LEGO bricks, allows children and fans to build and rebuild anything they can imagine.

Does LEGO use differentiation strategy?

The LEGO group is using the differentiation strategy as the company states, "we want to be the best, not the biggest."
In addition to that, the company is focusing on new product development along with innovation as well.

Why is LEGO so successful?

Instead of offering kids ready-made toys, LEGO gives them the opportunity to build their toys — a much more challenging activity which kept kids engaged for hours.
The LEGO System of Play becomes very successful and the company starts selling it to other countries.

Learn more about LEGO

brainly.com/question/16601881

#SPJ4

3 0

2 years ago

Wonder Company sells a plant asset that originally cost $720,000 for $240,000 on December 31. The accumulated depreciation accou

Masja [62]

Answer:

The company should recognize d. $120,000 loss on disposal

Explanation:

Companies frequently sell plant assets to dispose them. To recognize gain or loss on disposal:

First, the company calculates the carrying amount of the asset by using the original cost of the asset, minus all accumulated depreciation and any accumulated impairment charges.

Then, subtract this carrying amount from the sale price of the asset. If the remainder is positive, it is a gain and if the remainder is negative, it is a loss .

In Wonder Company:

The carrying amount of the asset = $720,000 - $360,000 = $360,000

Sales price - carrying amount of the asset = $240,000 - $360,000 = -$120,000 <0

The company should recognize $120,000 loss on disposal

5 0

3 years ago

Calculation of opportunity cost​

Calculation of opportunity cost