Venetian Construction Corp. began operations on January 1, 2014. During the year, Venetian entered into a contract with Ravi Corp. to construct a manufacturing facility. At that time, Venetian estimated that it would take five years to complete the facility at a total cost of $7.6 million. The total contract price to construct the facility is $11.9 million. During the year, Venetian incurred $3,648,000 in construction costs on the project. The estimated cost to complete the contract is $4,452,000.
Venetian billed Ravi for 30% of the contract price and Ravi paid the amount.
Assuming that Venetian Construction Corp. uses the earnings approach, prepare schedules to calculate the amount of gross profit to be recognized and the amount to be shown as cost of uncompleted contract in excess of related billings or billings on uncompleted contract in excess of related costs for fiscal 2014, under each of the following methods:
(a) completed-contract method.
(b) percentage-of-completion method.
Show supporting calculations in good form.

  • CreatedSeptember 18, 2015
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