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 Topic: % of completion ( Topic Closed)
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joecjr
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| Posted: 21 Nov 2009 at 20:46 | IP Logged
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Can anyone help with this?
drawing a huge blank.
thank you.
On April 1, 2007, Pine Construction Company entered into a fixed-price contract to construct an apartment building for $6,000,000. Pine appropriately accounts for this contract under the percentage-of-completion method. Information relating to the contract is as follows:
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At December 31, 2007 |
At December 31, 2008 |
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Percentage of completion |
20% |
60% |
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Estimated costs at completion |
$4,500,000 |
$4,800,000 |
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Income recognized (cumulative) |
$ 300,000 |
$ 720,000 |
What is the amount of contract costs incurred during the year ended December 31, 2008?
< id=Answer = value=16319 name=Answer>A. $1,200,000
< id=Answer = value=16320 name=Answer>B. $1,920,000
< id=Answer = value=16321 name=Answer>C. $1,980,000
< id=Answer = value=16322 name=Answer>D. $2,880,000
__________________
FAR [83] 1109 Yaeger
AUD [90] 0510 Roger CPA
BEC [76] 0810 Yaeger/Gleim
REG [80] 1110 Yaeger
Done 12/16/2010
1year & 4months
Philadelphia, PA
joey_cjr@yahoo.com
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Future CPA
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| Posted: 21 Nov 2009 at 21:09 | IP Logged
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Can you please confirm if the correct answer is choice C?
The calculation is as follows:
2007:
20% is completed and the estimated total cost at completion is: 4,500,000.
20%*4,500,000 = 900,000 costs incurred in 2007
2008:
60% is completed and the estimated total cost at completion is: 4,800,000.
60%*4,800,000 = 2,880,000 of total costs incurred so far.
But you already recorded 900,000 in the previous year.
2,880,000 - 900,000 = 1,980,000 costs incurred in 2008
__________________
B:85
A:90
R:92
F:90
My inspiration: "O mankind! We have created you male & female, & have made you nations & tribes that ye may know one another. The noblest of you is the best in conduct."-Quran
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yahoofan
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| Posted: 21 Nov 2009 at 21:09 | IP Logged
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Actual cost incurred up to Dec 31,2007:
4,500,000*20% = 900,000
Actual cost incurred up to Dec 31,2008:
4,800,000*60%= 2,880,000
Actual cost incurred in year of 2008 =
2,880,000 - 900,000 = 1,980,000
So the answer is C.
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joecjr
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| Posted: 21 Nov 2009 at 21:31 | IP Logged
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yes c is the correct answer.
thank you for the help.
__________________
FAR [83] 1109 Yaeger
AUD [90] 0510 Roger CPA
BEC [76] 0810 Yaeger/Gleim
REG [80] 1110 Yaeger
Done 12/16/2010
1year & 4months
Philadelphia, PA
joey_cjr@yahoo.com
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