Burton Corp has contrated with State of Texas to build 500 miles of uniform high

Question

Burton Corp has contrated with State of Texas to build 500 miles of uniform highway through flat desert for a fixed priced of $5 million. At the end of its accounting period, Burton has built 300 miles of road. In that same period, Burton has already incurred $2.4 million of costs and estimates its total cost to complete the job will be $3 million (ie. another $600,000 build remaining 200 miles.) How much revenue and income should Burton recognize for this accounting period using input and output measures? Show calculations for credit. Burton Corp has contrated with State of Texas to build 500 miles of uniform highway through flat desert for a fixed priced of $5 million. At the end of its accounting period, Burton has built 300 miles of road. In that same period, Burton has already incurred $2.4 million of costs and estimates its total cost to complete the job will be $3 million (ie. another $600,000 build remaining 200 miles.) How much revenue and income should Burton recognize for this accounting period using input and output measures? Show calculations for credit.

Explanation / Answer

For 500 Miles agreed price was $5 Millions By the end of accounting Period they Built 300 Miles Therefore Percentage of Completion of Work is 60%((300/500)*100) Hence Revenue to be Recognised is (5*60%) $3 millions Expenses/Cost till that date $2.4 Millions Income to be Recognised $0.6 millions

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