Question
Crib Construction is constructing an office building under contract for Blanket Company and uses the percentage-of-completion method. The contract calls for progress billings and payments
Crib Construction is constructing an office building under contract for Blanket Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1,550,000 each quarter. The total contract price is $18,600,000 and Crib estimates total costs of $17,750,000. Crib estimates that the building will take 3 years to complete, and commences construction on January 2, 2018. At December 31, 2019, Crib Construction estimates that it is 75% complete with the building (it was 30% complete in 2018); however, the estimate of total costs to be incurred has risen to $18,000,000 due to unanticipated price increases. What is the total amount of Construction Expenses that Crib will recognize for the year ended December 31, 2019?
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