question archive During year 1, XYZ Construction Company started work on a $3 million construction contract that was completed in Year 2
During year 1, XYZ Construction Company started work on a $3 million construction contract that was completed in Year 2
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- During year 1, XYZ Construction Company started work on a $3 million construction contract that was completed in Year 2. The accounting records include the following information:
..................................................................................................................Year 1..........................................Year 2
Costs incurred to date...............................................................900,000..................................2,720,000
Estimated cost to complete contract.................................1,800,000................................. -
A. How much percent of the work is completed during year 2?
B How much contract revenue should XYZ construction company have recognized in year 1 if the method was percentage of completion method?
C. How much growth profit should have recognized in year 1 if the method was percentage of completion method?
D. How much growth profit should have recognized in year 1 if the method was completed contract?
E. How much growth profit is recognized in year 2 if the method was completed contract?
F. How much is the construction - in - progress account under percentage of completion method at the end of year 1?
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A. How much percent of the work is completed during year 2?
= 100% - 33.33%
= 66.67%
B How much contract revenue should XYZ construction company have recognized in year 1 if the method was percentage of completion method?
= 1,000,000
C. How much growth profit should have recognized in year 1 if the method was percentage of completion method?
=100,000
D. How much growth profit should have recognized in year 1 if the method was completed contract?
= Nil (Since contract is not complete at end of year 1)
E. How much growth profit is recognized in year 2 if the method was completed contract?
= 280,000
F. How much is the construction - in - progress account under percentage of completion method at the end of year 1?
= 900,000
