Question
In: Accounting
Emu Ltd was contracted to build a new apartment block for Kangaroo Ltd for $36,000,000. Payment...
Emu Ltd was contracted to build a new apartment block for Kangaroo Ltd for $36,000,000. Payment of three $12,000,000 instalments were due and paid on June 30 of each year. The expected and actual costs at the end of each year are detailed as follows: Year Expected Actual 2020 8,000,000 8,000,000 2021 13,000,000 15,000,000 2022 10,000,000 10,000,000 Total 31,000,000 33,000,000 Page 6 of 10 Note: The outcome the project can be measured reliably. Required: i. Calculate the percentage completion using the cost method at the end of each year (use percentages of 2 decimal places). ii. Calculate the gross profit (loss) and the revenue to be recognised each year (round to the nearest dollar) using the cost method. iii. Prepare the appropriate journal entries for year 2020 only. (4.5 marks)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Brady Construction Company contracted to build an apartment complex for a price of $5,800,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $5,800,000. Construction began in 2021 and
was completed in 2023. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2021
2022
2023
2021
2022
2023
1
1,580
2,370
1,140
3,510
1,140
—
2
1,580...
Brady Construction Company contracted to build an apartment complex for a price of $5,200,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $5,200,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,520
2,190
960
3,150
960
—
2
1,520...
Brady Construction Company contracted to build an apartment complex for a price of $6,000,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $6,000,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,600
2,430
1,200
3,630
1,200
—
2
1,600...
Brady Construction Company contracted to build an apartment complex for a price of $5,200,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $5,200,000. Construction began in 2021 and
was completed in 2023. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2021
2022
2023
2021
2022
2023
1
1,520
2,190
960
3,150
960
—
2
1,520...
Brady Construction Company contracted to build an apartment complex for a price of $5,200,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $5,200,000. Construction began in 2021 and
was completed in 2023. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars. Estimated
Costs to Complete Costs Incurred During Year (As of the End of the
Year) Situation 2021 2022 2023 2021 2022 2023 1 1,520 2,190 960
3,150 960 — 2 1,520...
Brady Construction Company contracted to build an apartment complex for a price of $6,800,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $6,800,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,680
2,670
1,440
4,110
1,440
—
2
1,680...
Brady Construction Company contracted to build an apartment complex for a price of $6,900,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $6,900,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,690
2,700
1,470
4,170
1,470
—
2
1,690...
Brady Construction Company contracted to build an apartment complex for a price of $6,300,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $6,300,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars. Estimated
Costs to Complete Costs Incurred During Year (As of the End of the
Year) Situation 2018 2019 2020 2018 2019 2020 1 1,630 2,520 1,290
3,810 1,290 — 2 1,630...
Brady Construction Company contracted to build an apartment complex for a price of $6,400,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $6,400,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,640
2,550
1,320
3,870
1,320
—
2
1,640...
Brady Construction Company contracted to build an apartment complex for a price of $6,400,000. Construction began...
Brady Construction Company contracted to build an apartment
complex for a price of $6,400,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
1
1,640
2,550
1,320
3,870
1,320
—
2
1,640...
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