Recording Costs for Self-Constructed Asset Amethyst Company constructed a building and incurred the following costs directly associated with construction. The building is valued at $170,500 (fair value) upon completion. Materials Labor Incremental overhead Interest on construction loan incurred before completion Interest on construction loan incurred after completion Total Required Prepare summary journal entries to record costs of (1) construction and (2) completion of the building. Assume that all qualifying interest during the current year is capitalized to the building. Note: Record debit accounts in alphabetical order using the first letter of the account name. Account Name Dr. Cr. 1. 2. $55.000 88,000 33,000 5.500 2.200 $183,700 Account Name ● 0 # ● • • Dr. 0 0 0 0 0 0 Cr. 0 0 0 0 0 0

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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.