Question
a. Buildem Co began construction of a road in 20X2, for a contract price of $5,400,000 and an estimated total cost of $4,320,000. Buildem incurred
a. Buildem Co began construction of a road in 20X2, for a contract price of $5,400,000 and an estimated total cost of $4,320,000. Buildem incurred $1,728,000 in costs during 20X2, and expects to finish the building in 20X4.
Compute the amount of gross profit recognized in 20X2 if Buildem uses the...
1. Point of Sales method
2. Percentage of Completion Method
Point of Sales: $
Percentage of Completion: $
b. During 20X3, Gator Realty Company sold several residential lots on an installment basis. The sales totaled $400,000. Terms were 30% down on the date of purchase, and 20 equal monthly payments beginning Jan 2, 20X4. The cost of the property sold was $232,000. Gator Realty uses the installment method for income tax purposes. How much gross profit will Gator recognize on its tax return for the following years:
1. 20X3: $
2. 20X4: $
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