Question

In: Accounting

On January 1, 2017, Spartan Company signed a $240 million contract with the City of Amherst...

  1. On January 1, 2017, Spartan Company signed a $240 million contract with the City of Amherst to construct a new city hall. Spartan expects to construct the building within two years and incur total expenses of $180 million. Spartan incurred $72 million in construction costs during 2017 and the remaining $108 million in 2018. Using the percentage-of-completion method, how much revenue should Spartan recognize in 2017?

Solutions

Expert Solution

  • Total cost = $ 180 millions
  • Cost incurred in 2017 = $ 72 millions
  • Percentage completed in 2017 = $72 million / 180 millions = 40%
  • Answer:
    Revenue to be recognised in the year 2017 = $ 240 million contract revenue x 40% = $ 96 millions
  • Final Answer value = $ 96 millions or $ 96,000,000

ekkarill92 answered 2 years ago
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