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23 December, 20:51

Franklin Construction entered into a fixed-price contract to build a freeway-connecting ramp for $22 million. Construction costs incurred in the first year were $12 million and estimated remaining costs to complete at the end of the year were $13 million. How much gross profit or loss will Franklin recognize in the first year if it recognizes revenue over time according to percentage of completion method?

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  1. 24 December, 00:07
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    year-1

    Cotract price 22,000,000

    Cost to date (12,000,000)

    Further Estimated Cost (1,000,000)

    Margin 9,000,000

    Stage of Completion on the basis work completion

    SOC % 12/13 92.308%

    For the year ended Profit & loss

    Year-1

    Revenue 92.308% 20,307,692

    Cost of Sales (12,000,000)

    Gross profit 8,307,692
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