Assume Company estimated the following about a $900,000 construction contract as of the end of Year1 and Year2.

	Year1	Year2	Year3*
Contract price	900,000	900,000	900,000
Estimated total expenses of contract (estimated for full 3-years as of the end of each year)	500,000	520,000	485,000
Estimated overall profit on the 3 year contract as of the end of each year. (Contract price less total estimated expenses)	400,000	380,000	415,000
% of completion as of the end of each year (I am providing this. You do not have the information about costs incurred in each year to compute these %s.)	20%	50%	100%

Read the columns as follows:

At the end of year1 the estimated over the whole contract period of 3 years was $400,000

At the end of year2 they redid the estimates. Now estimated profit over the whole contract period of 3 years was $380,000.

At the end of year3, the amounts are not estimates as the contract is complete*. The actual profit over the whole contract period of 3 years was $415,000.

A. If Company uses the % of completion method, how much profit or loss on the contract would it report in each year of the contract? Enter a loss with a minus sign.

Year1

Year2

Year3

B. Assume instead, that the contract does not qualify for revenue recognition over time (Company uses the completed contract method). How much profit or loss on the contract would it report in each year of the contract? Enter a loss with a minus sign.

Year1

Year2

Year3