Question

grand construction company was awarded a contact to construct an interchange at the junction of u.s 94 and highway 30 at atotoal contract price of 8000000$. the estimated total cost to complete the project were 6000000$.

Cooper Construction Company had a contract starting April 2012, to construct a $9,000,000 building that is expected to be completed in September 2014, at an estimated cost of $8,250,000. At the end of 2012, the costs to date were $3,795,000 and the estimated total costs to complete had not changed. The progress billings during 2012 were $1,800,000 and the cash collected during 2012 was 1,200,000. For the year ended December 31, 2012, compute gross profit that Cooper would recognize.

Answer 1

Answer to complete question in the list (Cooper Construction Company): Cumulative Costs to date Add: Estimated costs to complete Estimated total costs 2012 $3,795,000 [As this is the first year of the contract, cost incured this year equals to cumulative cost to date] $4,455,000 [Difference between $3795000 and $8250000 total estimated cost didn't change) $8,250,000 Percentage of completion 46% ($3795000 / $8250000 = 0.46 = 46%] Contract price of this project Less: Estimated total cost Contract's estimated gross profit $9,000,000 $8,250,000 $750,000 --> Must be spread over 3 years of contract's tenure Therefore, Contract value completed Less: Revenue recognized already till last year Revenue to be recognized Less: Cost incurred during the year Gross profit to be recognized in 2012 2012 $4,140,000 ($9000000 x 46%] $0 [Nil because it is the first year of the contract] $4,140,000 (based on % of completion) $3,795,000 (Given] $345,000