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15 December, 17:31

Excess Construction Corp. has a $16 million contract to construct a building. The company estimates $10.4 million in costs to construct the building and an expected gross profit of $5.6 million. During the current year, the company incurred $3,120,000 of costs on the contract. Under the percentage-of-completion method, how much will Excess Construction Corp. report as revenue in the current year?

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  1. 15 December, 17:36
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    Excess Construction Corp. report as revenue in the current year is $4.800.000

    Explanation:

    Consider the followoing calculations

    Percentage completion = 3.120.000/10.400.000 = 30%

    Revenue report in Current year = 16.000.000*30% = $4.800.000

    So answer is $4.800.000
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