2018, Cupid Construction Co. (CCC) began work on a two-year fixed price contract project. CCC recognizes...
2018, Cupid Construction Co. (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions):
| Accounts receivable, 12/31/2018 (from construction progress billings) | $ | 37.5 | |
| Actual construction costs incurred in 2018 | $ | 135 | |
| Cash collected on project during 2018 | $ | 105 | |
| Construction in progress, 12/31/2018 | $ | 207 | |
| Estimated percentage of completion during 2018 | 60 | % |
1.How much revenue (in millions) is recognized in 2019?
2. what is the net construction asset at 12/31/2018
Homework Answers
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| Revenue (in millions) is recognized in 2019: |
Construction in progress = actual costs incurred + gross profit recognized |
| $207=$135+X |
| X=$72 |
| Therefore, the amount of gross profit on the project recognized by CCC during 2016 = $72 |
| Net Construction Asset at 12/31/2018: |
| Billings - Cash collections = Accounts Receivables |
| Billings = Cash Collections + Accounts Receivables |
| Billings = $105+$37.5 |
| Billings=$142.5 |
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