913 Indiana Co. 2015. During 201 to complete the project. Tndali Rec oo began a

Question

913 Indiana Co. 2015. During 201 to complete the project. Tndali Rec oo began a construction project in 2 013 that will provide it $150 million when it is compléted in 3, Indiana incurred $36 million of costs and estimates an additional $84 million of costs Revonue Isom Poject using the percentage-of-completion method, Indiana: 2013/2014/201 Recognized no gross profit or loss on the project in 2013. Recognized $9 gross profit on the project in 2013. Cnehon cos Recognized S36 millin loss on the project in 2013. s-InCamal dugy ar3 A. B. Recognized $6 million loss on the project in 2013. evenes 3b ryear - L. S

Explanation / Answer

Yes your answer is correct we will recognize $9 Million Gross profit in 2013

First we will have to find expected Gross Profit

G.P. = Estimate Profit/ Total revenue

Estimate profit = total revenue - total estimate cost

= $150 million - $36 million - 84 million

Estimate profit= $30 Million

Percentage of Work Completed

Percentage of Work Completed = Work Done / Total Cost

= $36 Million / (36+84)million

Percentage of Work Completed = 30%

GP to be recognized = Percentage of Work Completed * Estimate Profit

= 30% * $30 Million

= $9 Million

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