Question

In: Accounting

I have a question regarding the percentage-of-completion. For example, A company wants to make a contract...

I have a question regarding the percentage-of-completion.

For example, A company wants to make a contract with B constructor. The estimated cost was $900,000, and the contractor wants to add a margin of 10% on its cost estimate.

On the day of the formed of the contract, the finalized cost was $1,000,000. The small storage room will be finished in 3 years, and each year $95,000, $120,000, $250,000 will be incurred for 3 years.

1. Please recognized the revenue over time with the percentage-of-completion method.

2. Does that margin is necessary for the calculation, and if not, when do I need to use it.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Using Percentage-of-Completion and Completed Contract Methods Halsey Building Company signed a contract to build an office...
Using Percentage-of-Completion and Completed Contract Methods Halsey Building Company signed a contract to build an office building for $40,000,000. The scheduled construction costs follow. Year Cost 2016 $9,000,000 2017 15,000,000 2018 6,000,000 Total $30,000,000 The building is completed in 2018. For each year, compute the revenue, expense, and gross profit reported for this construction project using each of the following methods. a. Percentage-of-completion method 2016 2017 2018 Revenue Answer Answer Answer Expense Answer Answer Answer Gross Profit Answer Answer Answer...
A company uses the percentage-of-completion method to account for a 4-year construction contract. Which of the...
A company uses the percentage-of-completion method to account for a 4-year construction contract. Which of the following should be used in the calculation of the income recognized in the first year? Select one: a. Progress Billings, but not Collections on Progress Billings b. Collections on Progress Billings, but not Progress Billings c. Both Progress Billings and Collections on Progress Billings d. Neither Progress Billings nor Collections on Progress Billings
Percentage-of-Completion and Completed Contract Methods Philbrick Company signed a three-year contract to provide sales training to...
Percentage-of-Completion and Completed Contract Methods Philbrick Company signed a three-year contract to provide sales training to the employees of Elliot Company. The contract price is $1,200 per employee and the estimated number of employees to be trained is 400. The expected number to be trained in each year and the expected training costs follow. Number of Employees Training Costs Incurred 2016 125 $60,000 2017 200 75,000 2018 75 40,000 Total 400 $175,000 Required For each year, compute the revenue, expense,...
Percentage-of-Completion and Completed Contract Methods Philbrick Company signed a three-year contract to provide sales training to...
Percentage-of-Completion and Completed Contract Methods Philbrick Company signed a three-year contract to provide sales training to the employees of Elliot Company. The contract price is $1,200 per employee and the estimated number of employees to be trained is 400. The expected number to be trained in each year and the expected training costs follow. Number of Employees Training Costs Incurred 2016 125 $60,000 2017 200 75,000 2018 75 40,000 Total 400 $175,000 Required For each year, compute the revenue, expense,...
I have a question regarding supply and demand in microecconomics. For example, when there is population...
I have a question regarding supply and demand in microecconomics. For example, when there is population growth, does demand shifts to right? and when gas price increases, does it affect supply or demand? also, does supply shifts to left due to iincreased gas price? Please let me know as soon as possible.
When we formed the construction contract, do we need the margin percentage for the percentage-of-completion method?...
When we formed the construction contract, do we need the margin percentage for the percentage-of-completion method? I am trying to calculate the revenue. I have information about the estimated cost, cost incurred per year, the finalized cost, project years, and margin. However, I am not sure it is necessary. It said that the worker wants to add a margin of % on its cost estimate. Can anyone help me to use an example to explain to me?
Make Turner’s 2021 journal entries using the percentage-of-completion method.
Turner, Inc. began work on a $7,000,000 contract in 2021 to construct an office building. During 2021, Turner, Inc. incurred costs of $1,700,000, billed its customers for $1,200,000, and collected $960,000. At December 31, 2021, the estimated future costs to complete the project total $3,300,000. Make Turner’s 2021 journal entries using the percentage-of-completion method.  
Nash Construction Company uses the percentage-of-completion method of accounting. In 2017, Nash began work under contract...
Nash Construction Company uses the percentage-of-completion method of accounting. In 2017, Nash began work under contract #E2-D2, which provided for a contract price of $2,234,000. Other details follow: 2017 2018 Costs incurred during the year $615,980 $1,420,000 Estimated costs to complete, as of December 31 1,005,020 –0– Billings to date 413,000 2,234,000 Collections during the year 351,000 1,530,000 Prepare a complete set of journal entries for 2017 (using the percentage-of-completion method). (Credit account titles are automatically indented when amount is...
Long‐term contract based on percentage of completion method Jim’s Construction Co. has a $6,800,000 contract which...
Long‐term contract based on percentage of completion method Jim’s Construction Co. has a $6,800,000 contract which began on January 1, 2015 to build a new football stadium with an expected completion date of October 31, 2017. The following table provides information gathered during the construction period. Jim uses the percentage completion method to account for this contract.                                                                                                                                  2015 2016 2017 Construction costs incurred during the year 2,040,000 2,932,500 1,657,500 Estimated costs to complete 3,060,000 1,657,500 0 Billings during the...
Widjaja Compay is accounting for a long term construction contract using the percentage of completion method....
Widjaja Compay is accounting for a long term construction contract using the percentage of completion method. It is a 4 year contract that is currently in its second year. The latest estimates of contact costs indicate that the contact will be completed at a profit to the company. Based on this information please answer the following: 1 What theoretical justification is there or the Widjaja Company's use of the percentage-of-completion method 2 Discuss how the progress billings will be accounted...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT