Question
Ivanhoe Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will
Ivanhoe Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost $599,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $905,000. The following data pertain to the construction period. 2017 2018 2019 Costs to date $257,570 $413,310 $609,000 Estimated costs to complete 341,430 185,690 0 Progress billings to date 270,000 551,000 905,000 Cash collected to date 240,000 501,000 905,000
Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.
Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.
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