Question

Excess Construction Corp. has a $16 million contract to construct a building. The company estimates $10.4 million in costs to construct the building and an expected gross profit of $5.6 million. During the current year, the company incurred $3,120,000 of costs on the contract. Under the percentage-of-completion method, how much will Excess Construction Corp. report as revenue in the current year?

Answer 1

Answer:

Excess Construction Corp. report as revenue in the current year is $4.800.000

Explanation:

Consider the followoing calculations

Percentage completion = 3.120.000/10.400.000 = 30%

Revenue report in Current year = 16.000.000*30% = $4.800.000

So answer is $4.800.000