Perfectionist Construction Company was the low bidder on an office building construction contract. The contract bid was $9,000,000, with an estimated cost to complete the project of $7,000,000. The contract period was 30 months starting May 1, 2010. The company uses the cost-to-cost method of estimating earnings. Because of changes requested by the customer, the contract price was adjusted downward to $8,600,000 on May 1, 2011. A record of construction activities for the years 2010â€“2013 is as follows:
The estimated cost to complete the contract as of the end of each accounting period is:
Calculate the gross profit for the years 2010â€“2012 under the percentage-of-completion method of revenuerecognition.