Answered: percentage-of-completion method

Business

Accounting

percentage-of-completion method

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 26E

See similar textbooks

Related questions

Q: How much gross profit should be reported for 2021?

A: Percentage-of-Completion Method-: The Percentage of Completion Method comes under the revenue…

Q: During 2021, Cord Builders, Inc. work on a P9,000,000 fixed-price construction contract that was…

A: Completed contract method:- In this method of revenue recognition, revenue and cost does not get…

Q: 2020 2021 2022 Costs for the year $3,800 4,600 1.150 Estimated costs to complete 4,600 1,220 -0-…

A: Blossom Company Discussed in Question is a Construction Company. We Understand that Construction…

Q: In 2020, Blue Construction Corp. began construction work under a 3-year contract. The contract price…

A: Construction Contract: The term "construction contract" refers to agreements to do architectural,…

Q: What was the initial estimated total income before tax on this contract? A) $900,000 B) $1,200,000…

A: Construction Contract: The term "construction contract" refers to agreements to do architectural,…

Q: During 2025, Cullumber Company started a construction job with a contract price of $1,620,000. The…

A: The percentage of completion method is the method of revenue recognition which is used in real…

Q: Oriole Enterprises Ltd. has entered into a contract beginning in February 2023 to build two…

A: Percentage of Completion MethodThis method is used to determine the revenue from the ongoing…

Q: In 2018, Long Construction Corporation began construction work under a three-year contract. The…

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: Bramble Construction Company began work on a $415,000 construction contract in 2020. During 2020,…

A: Under construction process, the revenue or loss can be calculated on the basis of percentage of work…

Q: Santiago builders began construction work in 2021 for a project with contract price of P24,000,000.…

A: Apply the percentage of completion method in the contract work to know the progress of the work to…

Q: In 2024, KP Building Incorporated began work on a four-year construction project (called Cincy One).…

A: Cost allocation is used in analyzing or identifying the process to assign the cost to people, and…

Q: Headland Construction Company began work on a $417,500 construction contract in 2020. During 2020,…

A: Under construction process, the revenue or loss can be calculated on the basis of percentage of work…

Q: Deen Construction began a construction project in 2018. The contract price was $1,250,000, and the…

A: Gross profit refers to the profit which is earned by the company after deducting all its production…

Q: percentage of completion method

A: Gross income for the year = Contract price * Cost incurred during the year/Expected total cost

Q: percentage of completion method

A: Under percentage of completion method revenue and expenses are recognised based on the percentage of…

Q: Khodra Construction has consistently used the percentage-of-completion method of recognizing income.…

A: Under the percentage of completion method Revenue, Expenses, and Gross profit are recognized each…

Q: ABC Construction Company began operations in 2020. Construction activity for the first year is shown…

A: The percentage of Completion = Cost incurred to date/ Cost incurred to date + Cost to complete…

Q: reports income by the percentage of completion method. In 2019, Crevar started a P2,000,000…

A: Profit on incomplete contract: At the end of an accounting period, it may be found that certain…

Q: Grouper, Inc. began work on a $6,491,000 contract in 2020 to construct an office building. During…

A: Calculate gross profit: Particulars Amount Cost incurred during the year (1) $1,941,020 Cost…

Q: Manson Construction Corp. has consistently used the percentage-of-completion method. In 2020, Manson…

A: Since you have posted multiple questions, we will do the first one for you. To get the remaining…

Concept explainers

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.

Question

During the year 2020, Pop Construction Corp. began work on a contract for $3,700,000. Other details follow:

Costs incurred during the year $1,800,000
Estimated costs to complete as of December 31= 1,200,000
Billings during the year1,650,000
Collections during the year 975,000

Pop uses the percentage-of-completion method. For calendar 2020, Pop should report gross profit of?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Percentage of completion method

VIEW

Step 2 Calculation of gross profit for Pop Construction Corp

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows: Required: 1. Compute the gross profit or loss recognized in 2019 and 2020. 2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.
On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
In 2020, Pop Construction Corp. began work on a contract for $3,700,000. Other details follow: 2020 Costs incurred during the year $1,800,000 Estimated costs to complete as of December 31 1,200,000 Billings during the year1,650,000 Collections during the year 975,000 Pop uses the percentage-of-completion method. For calendar 2020, Pop should report gross profit of?
HuskiesBest Construction Company began work on a $420,000 construction contract in 2020. During 2020, HuskiesBest incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At December 31, 2020, the estimated additional costs to complete the project total $162,000. Prepare HuskiesBest 's journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.
Dhapa
Cullumber Construction Co. uses the percentage-of-completion method. In 2024, Cullumber began work on a contract for $23200000; it was completed in 2025. The following cost data pertain to this contract: Year Ended December 31 2024 2025 Cost incurred during the year $8736000 $5720000 Estimated costs to complete at the end of year 5824000 The amount of gross profit to be recognized on the income statement for the year ended December 31, 2025 is ○ $3456000. ○ $8744000. $2920000. $3560000.
Dinesh bhai
Archer Construction Company began work on a $420,000 construction contract in 2020. During 2020, Archer incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At December 31, 2020, the estimated additional costs to complete the project total $162,000. Prepare Archer's journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.
Kingbird Construction Company began work on a $418,500 construction contract in 2020. During 2020, Kingbird incurred costs of $285,500, billed its customer for $233,000, and collected $172,000. At December 31, 2020, the estimated additional costs to complete the project total $155,765.Prepare Kingbird’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the transaction using the percentage-of-completion method enter a debit amount enter a credit amount enter an account title to record the transaction using the percentage-of-completion method enter a debit…
Headland Construction Company began work on a $404,000 construction contract in 2020. During 2020, Headland incurred costs of $273,000, billed its customer for $232,000, and collected $182,000. At December 31, 2020, the estimated additional costs to complete the project total $163,660.Prepare Headland’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.
Culver Construction Company began work on a $402, 000 construction contract in 2020. During 2020, Culver incurred costs of $252,000, billed its customer for $210, 500, and collected $177,000. At December 31, 2020, the estimated additional costs to complete the project total $162, 405. Prepare Culver's journal entry to record profit or loss, if any, using (a) the percentage-of - completion method and (b) the completed - contract method.
Headland Construction Company began work on a $417,500 construction contract in 2020. During 2020, Headland incurred costs of $285,000, billed its customer for $217,500, and collected $183,000. At December 31, 2020, the estimated additional costs to complete the project total $155,835. Prepare Headland's journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) No. Account Titles and Explanation Debit Credit (a) (b)