A construction company entered into a fixed-price contract to build a soccer stadium for $15,000,000. Construction costs incurred during the first year were $3,675,000, and estimated costs to complete at the end of the year were $6,825,000. The company recognizes revenue over time according to percentage of completion. Fixed-price contract amount:$15,000,000 Construction costs incurred in first year:$3,675,000 Estimated costs to complete at end of first year:$6,825,000 How much revenue and gross profit or loss will appear in the company’s income statement in the first year of the contract? Percentage of completion at end of first year Revenue Gross profit (loss) Nothing in this area will be graded, but it will be submitted with your assignment.

The objective of the question is to calculate the revenue and gross profit or loss that will appear…

Answered: A construction company entered into a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A construction company entered into a fixed-price contract to build a soccer stadium for $15,000,000. Construction costs incurred during the first year were $3,675,000, and estimated costs to complete at the end of the year were $6,825,000. The company recognizes revenue over time according to percentage of completion.


Fixed-price contract amount:	$15,000,000
Construction costs incurred in first year:	$3,675,000
Estimated costs to complete at end of first year:	$6,825,000

How much revenue and gross profit or loss will appear in the company’s income statement in the first year of the contract?

Percentage of completion at end of first year
Revenue
Gross profit (loss)




Nothing in this area will be graded, but it will be submitted with your assignment.