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Questions Bigtime Builders Limited undertook a contract for building a factory for $ 15 million. The contractor incurred a co

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Answer #1

In the given case,

Contract for building a factory = $15 million

The contractor incurred a cost of $1 million on the construction up to December 31, 2008.

Estimated cost of completion of contract = $15 million

Particulars Amount ($)
Cost of construction of factory incurred 31.12.2008 1 million
Add :- estimated future cost 15 million
Total estimated cost of construction 16 millions
Contract price 15 millions

Stage of completion

Percentage of completion till date to total estimated cost of construction = (1÷16)×100 = 6.25%

Revenue and profit to be recognised for the year 31st December 2008 = $15 millions × 6.25% = $937500

Loss for the year 31.12.2008 = $1milliion - $937500 = $62500.

From the given contract,

We can recognise the revenue of $937500 and a loss of $62500.

These are all information required to solve the above given question.

I hope, all the above mentioned information and calculations are useful and helpful to you.

If there is any clarifications required regarding there were provided answer, please mention them in comment box.

Thank you.

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