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?

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.