Help Save&ExitS; Indiana Co. began a construction project in 2018 with a contrac
ID: 2555444 • Letter: H
Question
Help Save&ExitS; Indiana Co. began a construction project in 2018 with a contract price of $161 million to be received when the project is completed in 2020 During 2018, Indiana incurred $34 million of costs and estimates an additional $81 million of costs to complete the project Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed In 2019, Indiana incurred additional costs of $59 million and estimated an additional $36 milion in costs to complete the project Indiana (Do not round your percentage calculated) Multiple Choice Recognized $3050 million gross profit on the project in 2019 Recognized $8.00 miion gross profit on the project in 2019 MacBook Air 5 6Explanation / Answer
Costs incurred in 2018
$ 34
million
Estimated additional cost
$ 81
million
Total Costs
$ 115
million
Contract Price
$ 161
million
Estimated Revenue
$ 46
million
Revenue is recognized over time on the basis of percentage of project completed
Project Completed in 2018
= 34/115
29.57%
Revenue to be recognized in 2018
= 46 * 29.57%
$ 14
million
Costs incurred in 2018
$ 34
million
Costs incurred in 2019
$ 59
million
Estimated additional cost
$ 36
million
Total Costs
$ 129
million
million
Contract Price
$ 161
million
Estimated Revenue
$ 32
million
Revenue is recognized over time on the basis of percentage of project completed
Project Completed till 2019
= (34+59) / 129
72.09%
Revenue to be recognized till 2019
= 32 * 72.09%
$ 23
million
Revenue recognized in 2018
$ 14
million
Revenue to be recognized in 2019
= 23 - 14
$ 9
million
Costs incurred in 2018
$ 34
million
Estimated additional cost
$ 81
million
Total Costs
$ 115
million
Contract Price
$ 161
million
Estimated Revenue
$ 46
million
Revenue is recognized over time on the basis of percentage of project completed
Project Completed in 2018
= 34/115
29.57%
Revenue to be recognized in 2018
= 46 * 29.57%
$ 14
million
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