JJ Construction Inc. entered into a contract with a customer to build a movable storage facility...
JJ Construction Inc. entered into a contract with a customer to build a movable storage facility on January 1, 2020, for $1,800,000. JJ Construction Inc. owns the work in process and constructs this type of storage unit for a number of customers. The customer made a down payment of 10% of the project, with an additional 10% due at the end of year one and the remaining due when it takes control of the facility. The facility is expected to be completed in two years for a total cost of $1,440,000. Actual costs incurred through December 31, 2020, are $600,000. Determine the amount of revenue to record in 2020.
Homework Answers
Solution:
Amount of revenue to record in 2020 = Price * % of completion
= $1,800,000 * ($600000/ $1440000)
= $750,000
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