Ex. 18-134—Percentage-of-completion method. Penner Builders contracted to build a high-rise for €35,000,000. Construction began in 2018...

Ex. 18-134—Percentage-of-completion method. Penner Builders contracted to build a high-rise for €35,000,000. Construction began in 2018 and is expected to be completed in 2020. Data for 2018 and 2019 are:

2018 2019

costs incurred to date 4.5M 13M

Estimated cost to complete 18M. 12M

Penner uses the percentage-of-completion method.

Instructions

A: How much gross profit should be reported for 2018? Show your computation.

B: How much gross profit should be reported for 2019?

C: Make the journal Entry to record the revenue and gross profit for 2019

Expert Solution

A	2018
	percentage completion method	cost incurred till date
		estimated total cost

		25%

	Revenue to be recognised	€ 8.75	million

	Cost incurred	€ 4.50

	Gross Profit	€ 4.25	million

B	2019
	percentage completion method	cost incurred till date
		estimated total cost

		52%
	Revenue to be recognised	€ 18.20

	Cost incurred	€ 13.00

	Gross Profit	€ 5.20	million

C

	Construction Exp Dr	€ 8.50	million
	CWIP DR	€ 0.95	million
	To Construction Revenue	€ 9.45	million

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ekkarill92 answered 3 years ago

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