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    Percentage of Completion & Contract Completed Method

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    P18-6 (Long-Term Contract with Interim Loss) On March 1, 2007, Franziska van Almsick Construction
    Company contracted to construct a factory building for Sandra Volker Manufacturing Inc. for a total
    contract price of $8,400,000. The building was completed by October 31, 2009. The annual contract costs
    incurred, estimated costs to complete the contract, and accumulated billings to Volker for 2007, 2008, and
    2009:

    2007 2008 2009
    Contract costs incurred during the year $3,200,000 $2,600,000 $1,450,000
    Estimated costs to complete the contract
    at 12/31 3,200,000 1,450,000 -0-
    Billings to Volker during the year 3,200,000 3,500,000 1,700,000

    Instructions

    (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to
    be recognized as a result of this contract for the years ended December 31, 2007, 2008, and 2009.
    (Ignore income taxes.)

    (b) Using the completed-contract method, prepare schedules to compute the profit or loss to be
    recognized as a result

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    https://brainmass.com/business/business-law/238500

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    Solution Summary

    The solution explains the calculation of gross profit under percentage of completion method and completed contract method

    $2.19

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