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E 5-11 Income (loss) recognition; percentage-of-completion and completed contract methods compared LO4
Brady Construction Company contracted to build an apartment complex for a price of $5,000,000. Construction began in 2006 and was completed in 2008. The following are a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.
Estimated Costs to Complete
Costs Incurred During Year (As of the End of the Year)
Situation 2006 2007 2008 2006 2007 2008
1 1,500 2,100 900 3,000 900 —
2 1,500 900 2,400 3,000 2,400 —
3 1,500 2,100 1,600 3,000 1,500 —
4 500 3,000 1,000 3,500 875 —
5 500 3,000 1,300 3,500 1,500 —
6 500 3,000 1,800 4,600 1,700 —
Required:
Complete the following table.
Round all answers to the nearest whole dollar. Amounts in parenthesis do not require a minus sign.
Gross Profit (Loss) Recognized
Percentage-of-Completion Completed Contract
Situation 2006 2007 2008 2006 2007 2008
1 $ ____________ $ ____________ $ ____________ $ ____________ $ ____________ $ ____________
2 ____________ ( ____________) ____________ ____________ ____________ ____________
3 ____________ ( ____________) ( ____________) ____________ ( ____________) ( ____________)
4 ____________ ____________ ____________ ____________ ____________ ____________
5 ____________ ( ____________) ____________ ____________ ____________ ____________
6 ( ____________) ( ____________) ( ____________) ( ____________) ( ____________) ( ____________)
3 answers
Brady Construction Company contracted to build an apartment complex for a price of $5,000,000. Construction began in 2006 and was completed in 2008. The following are a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.
Costs Incurred During Year
Situation 2006 2007 2008
1 1,500 2,100 900
2 1,500 900 2,400
3 1,500 2,100 1,600
4 500 3,000 1,000
5 500 3,000 1,300
6 500 3,000 1,800
Estimated Costs to Complete
(As of the End of the Year)
Situation 2006 2007 2008
1 3,000 900 —
2 3,000 2,400 —
3 3,000 1,500 —
4 3,500 875 —
5 3,500 1,500 —
6 4,600 1,700 —
Gross Profit (Loss) Recognized
Percentage-of-Completion Completed Contract
Situation 2006 2007 2008
1
2
3
4
5
6
Completed Contract
Situation
2006 2007 2008
1
2
3
4
5
6
Costs Incurred During Year
Situation 2006 2007 2008
1 1,500 2,100 900
2 1,500 900 2,400
3 1,500 2,100 1,600
4 500 3,000 1,000
5 500 3,000 1,300
6 500 3,000 1,800
Estimated Costs to Complete
(As of the End of the Year)
Situation 2006 2007 2008
1 3,000 900 —
2 3,000 2,400 —
3 3,000 1,500 —
4 3,500 875 —
5 3,500 1,500 —
6 4,600 1,700 —
Gross Profit (Loss) Recognized
Percentage-of-Completion Completed Contract
Situation 2006 2007 2008
1
2
3
4
5
6
Completed Contract
Situation
2006 2007 2008
1
2
3
4
5
6
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1 answer