Dueplo Construction has agreed to build an addition for an office building for a contract price of $2,000,000. The period of construction is estimated to be three years. The contract is signed on January 1 of Year 1, and con- struction begins immediately. The building is completed on December 31 of Year 3. Data on costs incurred, and estimated costs to complete over the period of construction follow.
Dueplo Construction has agreed to build an addition for an office building for a contract price of $2,000,000. The period of construction is estimated to be three years. The contract is signed on January 1 of Year 1, and con- struction begins immediately. The building is completed on December 31 of Year 3. Data on costs incurred, and estimated costs to complete over the period of construction follow.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Dueplo Construction has agreed to build an addition for an office building for a contract price of $2,000,000.
The period of construction is estimated to be three years. The contract is signed on January 1 of Year 1, and con-
struction begins immediately. The building is completed on December 31 of Year 3. Data on costs incurred, and
estimated costs to complete over the period of construction follow.
As of December 31 ($ thousands)
Costs incurred
Estimated costs to complete.
b.
Year 1
$ 500
1,000
Year 2
$525
600
Year 3
$575
0
Required
a. Determine the profit or loss to be reported in Year 1, Year 2, and Year 3 assuming the company recognizes
revenue over time.
Determine the profit or loss to be reported in Year 1, Year 2, and Year 3 assuming the company recognizes
revenue at a point in time.
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