Spark Corp. has a contract to construct a P5,000,000 cruise ship at an estimated cost of P4,000,000. The company will begin construction of the cruise ship in early January 2018 and expects to complete the projects sometime in late 2022. Spark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances, Spark Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Spark Corp. expects to recover all its costs under the contract. During 2018 and 2019, the company has the following activity: 2018 2019 Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year P980,000 3,020,000 1,000,000 648,000 P2,040,000 1,960,000 1,000,000 1,280,000 On its statement of financial position at December 31, 2019, which amount will be reported for accounts receivable?

Spark Corp. has a contract to construct a P5,000,000 cruise ship at an estimated cost of P4,000,000. The company will begin construction of the cruise ship in early January 2018 and expects to complete the projects sometime in late 2022. Spark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances, Spark Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Spark Corp. expects to recover all its costs under the contract. During 2018 and 2019, the company has the following activity: 2018 2019 Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year P980,000 3,020,000 1,000,000 648,000 P2,040,000 1,960,000 1,000,000 1,280,000 On its statement of financial position at December 31, 2019, which amount will be reported for accounts receivable?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lark Corp. has a contract to construct a P5,000,000 cruise ship at an estimated cost of P4,000,000. The company will begin construction of the cruise ship in early January 20x4 and expects to complete the project sometime in late 20x7. Lark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances, Lark Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Lark Corp. expects to recover all its costs under the contract. During 20x4 and 20x5, the company has the following activity: 20x4 20x5Costs to date P 980,000 P2,040,000Estimated costs to complete 3,020,000 1,960,000Progress billings during the year 1,000,000 1,000,000Cash collected during the year 648,000 1,280,000For the year ended December 31, 20x5, how much revenue should Lark Corp. recognize on itsincome statement?P980,000P2,040,000P1,300,000P1,060,000
31. Lark Corp. has a contract to construct a P5,000,000 cruise ship at an estimated cost of P4.000.000. The company will begin construction of the cruise ship in early January 20x4 and expects to complete the project sometime in late 20x7. Lark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances., Lark Corp. believes there are inherent hazards in the contract beyond the normal, recuring business risks. Lark Corp. expects to recover all its costs under the contract. During 20x4 and 20x5, the company has the following activity: Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year 20x4 P 980,000 3,020,000 1,000,000 648,000 20x5 P 2,040,000 1,960,000 1,000,000 1,280,000 On its statement of financial position at December 31, 20x5, what amount will be reported for accounts receivable? P352.000. P720,000 a. C. P72,000. b. d. P2.000,000.
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Adidas is evaluating a proposal for a new product. If they launch the product, they will use an existing facility in the production process, which they previously acquired for $4 million. They currently lease it to a third party, and they expect to continue to do so if they don't use it for the new product. They rent it out for $102,000 and they expect that to remain flat for the foreseeable future. The project requires immediate investment in CAPX of $1.3 million, which will be depreciated on a straight-line basis over the next 10 years for tax purposes. The project will end after eight years, at which time they expect to salvage some of the initital CAPX and sell it for $469,000. The project requires immediate working capital investments equal to 10% of predicted first-year sales. After that, working capital will remain at 10% of the following year's expected sales. They expect sales to be $4.6 million in the first year and to stay constant for eight years. Total…
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An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some alr pollution. The company could spend an additional $40 million at Year 0 to mitigate the environmental problem, but it would not be required to do so. The plant without mitigation would require an initial outlay of $210.55 million, and the expected cash Inflows would be $70 million per year for 5 years. If the firm does Invest in mitigation, the annual inflows would be $75.20 million. Unemployment in the area where the plant would be built is high, and the plant would provide about 350 good jobs. The risk adjusted WACC is 19%. a. Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not…
An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some air pollution. The company could spend an additional $40 million at Year 0 to mitigate the environmental problem, but it would not be required to do so. The plant without mitigation would require an initial outlay of $269.87 million, and the expected cash inflows would be $90 million per year for 5 years. If the firm does invest in mitigation, the annual inflows would be $93.62 million. Unemployment in the area where the plant would be built is high, and the plant would provide about 350 good jobs. The risk adjusted WACC is 16%. Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not…
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