Question

evenue from its long-term contracts 2017, the company signed a contract to Question 3 Free Form Builders Inc., a construction company, recognizes revenue from its long-ter using the percentage-of-completion method. On March 29, 2017, the company signed construct a building for $1 million. The company estimated that it would take four years the contract and estimated the cost to the company at $625,000, as follows: Year Cost 2017 $100,000 2018 $150,000 2019 $175.000 2020 $200,000 Total $625.000 The actual costs in 2017 and 2018 ended up being exactly as estimated. At the end of 2017, Free Form expected costs for 2018-2020 to be exactly as estimated. However, on December 31, 2018, the company revised its estimates for the costs in 2019 and 2020. It estimated that it would cost $200,000 in 2019 and $300,000 in 2020 to complete the contract. 2019's actual costs were $100,00 more than estimated. At the end of 2019, the estimated costs to complete the contract were $400,000. 2020's actual costs ended up being $50,000 less than estimated. Required: Compute the revenue, expense, and profit/loss for each of the four years. Use FOUR DECIMAL PLACES (for calculation of percentage completed).

please provide full answer with following answer format

Answer 1

Free Form Builders Inc.

Percentage of completion method ( Contract amount : $ 1,000,000 )

Year	Calculations			Revenue	Expense	Profit/(loss)
2017	cost incurred in current year	$                                                                          100,000
	cost incurred to date	$                                                                          100,000		$                          160,000	$          100,000	$          60,000
	total estimated cost	$                                                                          625,000
	Percentage Complete	cost incurred to date/ Total estimated cost	16.0000%
	Revenue Recognized	(contract price* percentage complete)-revenue previously recognized	$        160,000
Year	Calculations			Revenue	Expense	Profit/(loss)
2018	cost incurred in current year	$                                                                          150,000
	cost incurred to date	$                                                                          250,000		$                          240,000	$          150,000	$          90,000
	total estimated cost	$                                                                          625,000
	Percentage Complete	cost incurred to date/ Total estimated cost	40.0000%
	Revenue Recognized	(contract price* percentage complete)-revenue previously recognized	$        240,000
Year	Calculations			Revenue	Expense	Profit/(loss)
2019	cost incurred in current year	$                                                                          300,000
	cost incurred to date	$                                                                          550,000		$                          333,333	$          300,000	$          33,333
	total estimated cost	$                                                                          750,000
	Percentage Complete	cost incurred to date/ Total estimated cost	73.3333%
	Revenue Recognized	(contract price* percentage complete)-revenue previously recognized	$        333,333
Year	Calculations			Revenue	Expense	Profit/(loss)
2020	cost incurred in current year	$                                                                          350,000
	cost incurred to date	$                                                                          900,000		$                          266,667	$          350,000	$        (83,333)
	total cost	$                                                                          900,000
	Percentage Complete	cost incurred to date/ Total cost	100%
	Revenue Recognized	(contract price* percentage complete)-revenue previously recognized	$        266,667
			TOTALS	$                      1,000,000	$          900,000	$        100,000