Brady Construction Company contracted to build an apartment complex for a price

Question

Brady Construction Company contracted to build an apartment complex for a price of $6,100,000. Construction began in 2016 and was completed in 2018. The following is 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

(As of the End of the Year)

Situation

2016

2017

2018

2016

2017

2018

need help with situation 3. got the other one right. thx

Brady Construction Company contracted to build an apartment complex for a price of $6,100,000. Construction began in 2016 and was completed in 2018. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

Explanation / Answer

SITUATION 3

Gross profit (loss) recognized under Percentage-of-Completion:

2013 => 1610/5300 => 30.38% * 800 => $243

2014 => 2460/4840 => 51%*1260 => $642.6 - $243 => $399.6 or $ 400

2015 => 3620 - 642.6 => $ 2977.4

Gross profit (loss) recognized under Completed Contract Method:

2013 => 0

2014 => 0

2015 => $3620

2013 2014 2015 Contract price 6100 6100 6100 Actual costs to date 1610 2460 2480 Estimated costs to complete 3690 2380 - Total estimated costs 5300 4840 2480 Estimated gross profit 800 1260 3620

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