Construction Solutions has a $20 million contract to construct a building. The company estimates a gross...
Construction Solutions has a $20 million contract to construct a building. The company estimates a gross profit of $4 million. During the current year, the company incurred $2 million of costs on the contract.
Under the percentage-of-completion method, how much will Construction Solutions report as revenue in the current year?
Homework Answers
% of completion = Costs incurred / Estimated cost of the project
Estimated project cost = 20 million - 4 Million = 16 million
% of completion = 2 / 16 = 12.50%
Revenue to be recognized in current year = 20 Million * 12.50%
= 2.50 Million
or 2500000
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