What is the percentage of completion for tower 1? 2. How much should the company report as operating expenses in relation to condominium project? 3. How much cost of the land is recognized as an asset in the company's books?
EMILY CONSTRUCTION COMPANY is constructing a two (2) Tower residential condominiums. Tower 1 sells 20 units while tower 2 sells 30 units. Both towers will share in the common amenities and occupy the same land area. All units have been pre-sold at this time.
The company estimates to spend:
$210,000,000 on the land
$200,000,000 on the common area
$200,000,000 for developing tower 1
$300,000,000 for developing tower 2
The company already incurred the following costs:
Land $210,000,000
Common Area (which is to be prorated to their saleable area) $100,000,000
Development cost for tower 1 $44,000,000
Development cost for tower 2 $150,000,000
Moreover, the company also incurred $10,000,000 as commissions to agents for tower 1 sales and $15,000,000 for tower 2 sales. The agents were already paid 50% of their commissions with the remaining 50% upon full payment from their clients.
1. What is the percentage of completion for tower 1?
2. How much should the company report as operating expenses in relation to condominium project?
3. How much cost of the land is recognized as an asset in the company's books?
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