Stiner Builders contracted to build a high-rise for $14,000,000. Construction be

Question

Stiner Builders contracted to build a high-rise for $14,000,000. Construction began in 2012 and is expected to be completed in 2015. Data for 2012 and 2013 are:

                                                                                                     2012               2013    

            Costs incurred to date                                                 $1,800,000      $5,200,000

            Estimated costs to complete                                         7,200,000        4,800,000

Stiner uses the percentage-of-completion method.

Instructions

25)    How much gross profit should be reported for 2012? Show your computation.

  

Explanation / Answer

Calculate gross profit for 2012 :

2012 Cost incurrent to date 1800000 Estimated cost to completed 7200000 Total cost of contract 9000000 Percentage completion (1800000*100/9000000) 20% Contract revenue recognized in 2012 (14000000*20%) 2800000 Cost incurred recognized in 2012 (1800000) Gross profit recognized in 2012 1000000

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