A Company Entered into a Contract to Construct a Building

A company entered into a contract to construct a building for a fee of $50,000. Construction began in 2006 and was completed in 2008. Transactions related to the contract are summarized below: $\begin{array} { | l | l | l | l | } \hline & 2006 & 2007 & 2008 \\\hline \text { Construction costs incurred to date } & \$ 8,000 & \$ 16,600 & \$ 15,900 \\\hline \text { Estimated costs to complete } & 32,000 & 16,400 & - 0 - \\\hline \text { Billings and collections during year } & 7,500 & 20,000 & 22,500 \\\hline\end{array}$ Compute the income that should be recognized each year using (a) the percentage-of-completion method and (b) the completed contract method.
[2006 | 2007 | 2008]
(a) $____________ $_______________ $______________
(b) $____________ $_______________ $______________

Correct Answer:

Verified

(a) 2006: $10,000 × (8/40) = $2,000
2007...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

View Full Answer For Free