Shanahan Construction Company has entered into a contract beginning January 1, 2022, to build a parking complex.

Question:

Shanahan Construction Company has entered into a contract beginning January 1, 2022, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period.


Instructions

a. Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

b. Using the cost-recovery method, compute the estimated gross profit that would be recognized during each year of the construction period.

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Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 9781119607519

4th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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