Business, 10.03.2020 00:36 tumadreeve7852

Shanahan Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period.
2020 2021 2022
Costs to date 270,000 450,000 610,000
Estimated costs to complete 330,000 150,000 0
Progress billings to date 270,000 550,000 900,000
Cash collected to date 240,000 500,000 900,000

(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.
(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.

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Answer from: landofliam30

a. Gross profit under the percentage of completion method

2020 - $ 120,000

2021 - $ 30,000

2022 - $ 140,000

b. Gross profit under the percentage of completion method

2020 - $ 0

2021 - $ 0

2022 - $ 290,000

Explanation:

Computations under the percentage of completion method

2020 2021 2022

$ $ $

Costs incurred 270,000 450,000 610,000

Costs to complete 330,000 150,000 0

Total costs 600,000 600,000 610,000

Percentage complete 45 % 66.67 % 100 %

Progress Billings 270,000 550,000 900,000

Revenue recognised based on percentages completed on total project value and decuting revenues recognized to date

Revenue recognised 45 % 66.67 % 100 %

Revenue for year 390,000 210,000 300,000

Gross profit 120,000 30,000 140,000

Computation under the completed contract basis

Undre a completed contract basis of revenue recognition, the revenues and expenses are deferred until the project is completed.

Gross profit on the profit is only recognised on completion of contract i.e in 2022.

Gross Profit 2020 $ 0

2021 $ 0

2022 $ 290,000

Answer from: Quest

Some disadvantages to leasing a car is that you are counting on someone to give you money every week or month depending on what you decided and if they don't have all of it well what if you needed that money now you as well have to pay not in full. a disadvantages to purchasing a new vehicle is if it is used then not all the time will absolutely everything work. its almost like a trail and era. although if it is a new car they will try to though all these specials and deals at you in your lease and it can be very overwhelming if you are not use to it.

Answer from: Quest

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Shanahan Construction Company has entered into a contract beginning January 1, 2020, to build a park...

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