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KSM94
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Joined: 05 Feb 2009
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Posts: 47
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| Posted: 01 Oct 2010 at 19:44 | IP Logged
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The following data pertain to a $ 2,000,000 long term construction contract
year 1 year 2 ; year 3
cost incurred during the year 500,000 700,000 500,000
Year end Est cost
to complete 1,000,000 300,000 --
Billing during the year 400,000; 700,000 900,000
Collections during the year 200,000 500,000 1,200,000
Compute Realised Gross Profit for year 1,2 and 3
Appreciate if some one caluculate above
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ccaml
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Joined: 26 Aug 2010
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| Posted: 02 Oct 2010 at 00:10 | IP Logged
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ignore Billing and Cash collection.
then 1) calculate total gross profit every year based on cost estimation. 2) calculate accumulated profit every year based on accumulated cost/total estimate cost; 3) subtract prior years accumulated profit recorded.
For example:
First year: total gross profit: 2,000,000-(1,000,000+500,000)=500,000
profit: 500,000/1,500,000*500,000=166,667
Second year: total gross profit: 2,000,000-(500,000+700,000+300,000)=500,000
accumulated Profit: (500,000+700,000)/1,500,000*500,000=400,000
Second year profit: 400,000-166,667=233,333
Third year:
total gross profit: 2,000,000-(500,000+700,000+500,000)=300,000
third year profit: 300,000-400,000=-100,000
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Topic: Percentage of Completion Contract
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