Question 1 Daisy Construction Ltd. has entered into a contract beginning January

Question

Question 1 Daisy Construction Ltd. has entered into a contract beginning January 1, 2014, to build a parking complex. It has estimated that the complex will cost $8 million and will take three years to construct. The complex will be billed to the purchasing company at $11.3 million. The details are as follows: 2014 2015 2016 Costs to date $ 3,060,000 $ 6,435,000 $ 8,300,000 Estimated costs to complete 4,596,300 2,032,557 –0– Progress billings to date 4,001,300 6,300,000 11,300,000 Cash collected to date 3,501,300 5,000,000 11,300,000 Under the earnings approach: Collapse question part (a) Incorrect answer. Your answer is incorrect. Try again. Using the percentage-of-completion method, calculate the estimated gross profit that would be recognized during each year of the construction period. (Round percent complete to 2 decimal places, e.g. 52.75% and final answers to 0 decimal places, e.g. 5,275.)

Explanation / Answer

Statement showing Gross profit ref Particulars Working 2014 2015 2016 a Cost to date given 3060000 6435000 8300000 b Estimated Cost to completion given 4596300 2032557 0 c Estimated total cost a+b 7656300 8467557 8300000 d % of completion a/c 39.96708593 75.99594547 100 e Revenue to be recognised =11300000*d% 4516280.71 8587541.838 11300000 f Loss to be recognised c-8300000 167557 g Gross profit e-a-f 1456280.71 1984984.838 3000000 h Progressive billing given 4001300 6300000 11300000 i Cash collection given 3501300 5000000 11300000

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