On April 1, 2015, Dougherty Inc. entered into a cost plus fixed fee contract to construct an
Question:
On April 1, 2015, Dougherty Inc. entered into a cost plus fixed fee contract to construct an electric generator for Altom Corporation. At the contract date, Dougherty estimated that it would take 2 years to complete the project at a cost of $2,000,000. The fixed fee stipulated in the contract is $450,000. Dougherty appropriately accounts for this contract under the percentage-ofcompletion method. During 2015, Dougherty incurred costs of $800,000 related to the project. The estimated cost at December 31, 2015, to complete the contract is $1,200,000. Altom was billed $600,000 under the contract.
Instructions Prepare a schedule to compute the amount of gross profit to be recognized by Dougherty under the contract for the year ended December 31, 2015. Show supporting computations in good form.
Step by Step Answer:
Intermediate Accounting IFRS Edition
ISBN: 9781118443965
2nd Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield