Percentage-of-Completion Method In 2013, Tarlo Company agrees to construct a hig
ID: 2494129 • Letter: P
Question
Percentage-of-Completion Method
In 2013, Tarlo Company agrees to construct a highway for Brice County over a 3-year period (2013 through 2015). The contract price is $1,350,000, and the construction costs (both actual and estimated) total $690,000 for the 3 years. The percentage completed at the end of each year is as follows: 2013, 25%; 2014, 70%; 2015, 100%.
Required:
1. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year using the percentage-of-completion method.
Tarlo Company
Gross Profit: Percentage-of Completion Method
2013 through 2015
Amount
2013
Correct 6 of Item 1
2014
Correct 8 of Item 1
2015
Correct 10 of Item 1
Total gross profit
Correct 12 of Item 1
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Solution
2. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year using the completed-contract method. If an amount is zero, enter "0".
Tarlo Company
Gross Profit: Completed-Contract Method
2013 through 2015
Amount
2013
Correct 6 of Item 2
2014
Correct 8 of Item 2
2015
Correct 10 of Item 2
Total gross profit
$
Hide1. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year using the percentage-of-completion method.
Tarlo Company
Gross Profit: Percentage-of Completion Method
2013 through 2015
Amount
2013
$Correct 6 of Item 1
2014
Correct 8 of Item 1
2015
Correct 10 of Item 1
Total gross profit
$Correct 12 of Item 1
Explanation / Answer
1) Percentage of Competion method:
Contract price: 13,50,000 Estmated cost : 6,90,000/- Gross Profit: 660,000/-
Profit recognised each year: 2013: 1,65,000/- 2014: 2,97,000/- 2015: 1,98,000/-
2) Completed contract method : 2015: 660,000/-
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