why

Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1 2013, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,000,000. Curtiss appropriately accounts for this contract under the completed contract method in its financial statements. The building was completed on December 31, 2015. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-13 At 12-31-14 At 12-31-1 Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date 10% 60% 100% $ 350,000 52,500,000 $4,250,000 3,150,000 720,000 1,700,000 2.170,000 3,600,000 Required 1. Complete the required information below to prepare schedules to compute gross profit or loss to be recognized as a result of this contract for each of the three years. (Input all amounts as positive values except losses which should be indicated by minus sign.) 201320142015 4,000,000 $4,000,000 S4,000,000 350,000 2,500,0004,250,000 3,500,000 4,200,0004,250,000 o $ 500,000 O $ 200,000 O $-250,000 O Contract price Actual costs to date Estimated costs to complete Total estimated costs Estimated gross profit (loss) 3,150,000 1,700,000 o (actual in 2015) Year 2013 2014 2015 Gross profit (loss) S0 0 200,000 o 50,000 2. Assuming Curtiss uses the percentage-of-completion method of accounting for long-term construction contracts, compute gross profit or loss to be recognized in each of the three years. (Loss amounts should be indicated with a minus sign.) ear 2013 2014 2015 Gross profit (loss) $50,000 -250,000 50,000 3. Assuming the percentage-of-completion method, compute the amount to be shown in the statement of financial position at the end of 2013 and 2014 as either cost in excess of billings or billings in excess of costs Statement of financial position 2013 2014 Current assets Costs less loss in excess of $0130,000 billings O Current liabilities Billings in excess of costs and profit 320,000 $0