98% B, Fri 1:54 Pt com m 4 6 Help Save & Exit Submit 6 Indiana Co. began a const

Question

98% B, Fri 1:54 Pt com m 4 6 Help Save & Exit Submit 6 Indiana Co. began a construction project in 2018 with a contract price of $165 million to be received when the project is completed in 2020. During 2018, Indiana incurred $31 milion of costs and estimates an additional $82 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed. In 2019, Indiana incurred additional costs of $55 million and estimated an additional $39 million in costs to complete the project. Indiana (Do not round your percentage calculated): ts

Explanation / Answer

Gross profit in 2018

$165 million*27.433628318% = $45.27-$31(cost) =$14.27 million

Gross profit in 2019

Revenue = $165million*68.80= $113.52million

Gross profit = $113.52million -$86million= $27.52million-$14.27(recognised in 2018) = $13.25 million

2018 2019 COST INCURRED (A) $31 $86 ($31+$55) ADDITIONAL COST TO BE INCURRED(B) $82 $39 TOTAL COST (C) $113 $125 PERCENTAGE OF COMPLETION (A)/(C) 27.433628318 68.80

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