Seasons Construction is constructing an office building under contract for Canno

Question

Seasons Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1,550,000 each quarter. The total contract price is $18,600,000 and Seasons estimates total costs of $17,750,000. Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2018.
At December 31, 2018, Seasons estimates that it is 30% complete with the construction, based on costs incurred. What is the total amount of Revenue and Profit from Long-Term Contracts recognized for 2018?

Explanation / Answer

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Contract Value    18,600,000 Total Cost    17,750,000 Total Profit          850,000 % of Completion 30% Revenue- 2018 (18600000*30%)      5,580,000 Profit- 2018 (850000*30%)          255,000

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