On 1/1/2021, the Laith Construction Company signed a contract with Khaled to build a property for 4 million, and that the property would be delivered no later than two years. with a performance bonus of JD 50,000 that will be paid based on the timing of completion. The amount of the performance bonus decreases by 5% per month for every month beyond the agreed-upon completion date. Management estimates that there is a 60% probability that the contract will be completed by the agreed-upon completion date, a 25% probability that it will be completed 1 month late, and only a 15% probability that it will be completed 2 months late. The completion rate on 31/12/2021 in the bid was 40%. Instruction: Answer the following questions 1. Expected total contract revenue is.... 2. The revenue to be recognized from the Construction in the income statement for the year 2021 is.
On 1/1/2021, the Laith Construction Company signed a contract with Khaled to build a property for 4 million, and that the property would be delivered no later than two years. with a performance bonus of JD 50,000 that will be paid based on the timing of completion. The amount of the performance bonus decreases by 5% per month for every month beyond the agreed-upon completion date. Management estimates that there is a 60% probability that the contract will be completed by the agreed-upon completion date, a 25% probability that it will be completed 1 month late, and only a 15% probability that it will be completed 2 months late. The completion rate on 31/12/2021 in the bid was 40%. Instruction: Answer the following questions 1. Expected total contract revenue is.... 2. The revenue to be recognized from the Construction in the income statement for the year 2021 is.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:On 1/1/2021, the Laith Construction Company signed a contract with Khaled to build a property
for 4 million, and that the property would be delivered no later than two years. with a performance
bonus of JD 50,000 that will be paid based on the timing of completion. The amount of the
performance bonus decreases by 5% per month for every month beyond the agreed-upon
completion date. Management estimates that there is a 60% probability that the contract will be
completed by the agreed-upon completion date, a 25% probability that it will be completed 1
month late, and only a 15% probability that it will be completed 2 months late. The completion
rate on 31/12/2021 in the bid was 40%.
Instruction: Answer the following questions
1. Expected total contract revenue is..
2. The revenue to be recognized from the Construction in the income statement for the year
2021 is....
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