Beck Construction Company began work on a new building project on January 1, 201
ID: 2595104 • Letter: B
Question
Beck Construction Company began work on a new building project on January 1, 2017. The project is to be completed by December 31, 2019, for a fixed price of $114 million. The following are the actual costs incurred and estimates of remaining costs to complete the project that were made by Beck's accounting staff: Years Actual costs incurred in each year Estimated remaining costs to complete the project (measured at Dec. 31 of each year) 2017 $ 32 million $ 64 million 2018 $ 49 million $ 49 million 2019 $ 37 million $ 0 Required: What amount of gross profit (or loss) would Beck record on this project in each year, assuming that Beck recognizes revenue for this project upon completion of the project? Place answers in the spaces provided below and show supporting computations. (Loss amounts should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Explanation / Answer
114
Price of the project at the end of december 31' 2019 $ 114 Million ($ in million) Particulars 2017 2018 2019 Previous year cost - 32 81 Actual Cost 32 49 37 Total cost incurred 32 81 118 Estimated remaining cost 64 49 - Total project cost estimated 96 130 118 Fixed price of the project114
114 114 Estimated profit 18 (16) (4) Gross profit/(Loss) to be recognised 6 (10) (0) (Estimated profit/Total projected Cost estimated* total cost incurred) Note: Revenue recognition at the time of completion will be after setting of previous years loss or profitRelated Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.