JJ Construction Inc. entered into a contract with a customer to build a movable storage facility on January 1, 2020, for $2,100,000. 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 $1,680,000. Actual costs incurred through December 31, 2020, are $700,000. Determine the amount of revenue to record in 2020.
| Revenue to recognize in 2020 |
Answer-% of work completed by December 31, 2020 = Actual cost incurred / Total estimated costs = $700,000 / $1,680,000 = 41.6667%
Amount of revenue to record in 2020 using cost to cost method = Total contract price * % completion
= $2,100,000*41.6667% = $875,000
JJ Construction Inc. entered into a contract with a customer to build a movable storage facility...
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