Percentage of Completion / Installment Method
Not what you're looking for?
McNeil Construction Company is involved in a long-term construction contract to build an office building. The estimated cost is $30 million and the contract price is $38 million. Other information follows:
Office Building
Cash Collection Actual Costs Incurred
2004 $ 6,000,000 $ 4,500,000
2005 $ 8,000,000 $ 6,000,000
2006 $ 12,500,000 $ 12,000,000
2007 $ 11,500,000 $ 7,500.000
The projected is completed in 2007 and all cash to be received from eh contract has been received.
How would a schedule look if you were determining the gross profit in each year for the long term construction contracting using the percentage of completion method?
2) Westphal Construction sold to Walker Management Company apartments it had constructed. The sales price was $2.5 million. Westphal's cost to construct the apartments was $1.6 million. Westphal appropriately uses the installment method. Additional information:
Cash Collected
2004 $ 800,000
2005 $ 1,200,000
2006 $ 500,000
A) What would the gross profit for each year using the installment method.
B) Assuming the construction costs were $1.75 million what would A) look like.
Purchase this Solution
Solution Summary
The solution explains the calculations using the percentage of completion method and the installment method.
Solution Preview
Please see the attached file.
1. In the percentage of completion method, we find out the percent completion. This is ...
Purchase this Solution
Free BrainMass Quizzes
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Operations Management
This quiz tests a student's knowledge about Operations Management
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media