# Answered Essay: Compute the amount of revenue and gross profit or loss to be recognized in 2018 using the percentage of completion method

Compute the amount of revenue and gross profit or loss to be recognized in 2018 using the percentage of completion method

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for \$350 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows (\$ in millions): 2018 2019 2020 s 30 \$140 \$40 Costs incurred during the year Estimated costs to complete as of December 31 170 80 Required 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. 2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time. 3. Suppose the estimated costs to complete at the end of 2019 are \$170 million instead of \$80 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Suppose the estimated costs to complate at the end of 2019 are \$170 million instead of \$80 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. (Enter your answers in millions. Use percentages as calculated and rounded in the table below to arrive at your final answer.) Choose numerator Choose denominator % complete to date Actual costs to date Estimated total costs 2019 170 2019 To date in prior Years R in 2019 Gross profia (loss) Required 2

CALCULATE AMOUNT OF REVENUE AND GROSS PROFIT UNDER PERCENTAGE OF COMPLETIONG METHOD :

Percentage of completion (2018) = Cost incurred to date*100/Total estimated cost

= 30*100/200

Percentage of completion (2018) = 15%

Contract revenue (2018) = 350*15% = 52.50

Gross profit (2018) = contract revenue as on date-cost incurred as on date

= 52.50-30

Gross profit (2018) = 22.50

Note : question demands only 2018 contract revenue and gross profit

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