Question
On January 1, 2018 The Village of Salem engaged to Pumpkin Enterprises company to construct a municipal office complex. The three-year a to receive 10
On January 1, 2018 The Village of Salem engaged to Pumpkin Enterprises company to construct a municipal office complex. The three-year a to receive 10 million in cash payments from the city in three installments: 25% when the project was 30% complete; 25% when the project was 60% complete; and 50% when the project was fully complete. The contract required that Pumpkin Enterprises completion estimates be certified by an independent consultant before payments were made. During the first year of the contract, Pumpkin Enterprises completed 30% of the contract and incurred costs of 2,490,000. During the second year, the project was certified as being 60% complete and Pumpkin Enterprises incurred costs of 3,100,000. During the third year, Pumpkin Enterprises completed the project and incurred costs of 3,110,000. Assuming Pumpkin Enterprises had no other revenues or expenses, determine the profit on construction for 2018, 2019, and 2020 under the following methods: A. Percentage of Completion' B. Completed Contract C. Which method best represents the profitability of Pumpkin Enterprises from 2018 to 2020.
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