Constructing and Assessing Income Statements Using Percentage-of Com.docx
1. Constructing and Assessing Income Statements Using
Percentage-of Completion
On March 15, 2012, Frankel Construction contracted to build a
shopping center at a contract price of $120 million. The
schedule of expected (which equals actual) cash collection and
contract costs follow ($ millions):
Year
Cash Collections
Cost Incurred
2012
$ 30
$ 25
2013
50
20
2014
40
40
Total
$ 120
$ 85
(a) Calculate the amount of revenue, expense, and net income
for each of the three years 2012 through 2014 using the
percentage-of-completion revenue recognition method.
Rounding instructions
:
Round percentages to the nearest whole number. Use rounded
percentages for remaining calculations. Round revenue and
income to the nearest whole number.
Percentage of Completion Method
Year
Costs incurred
Percent of total expected costs
Revenue recognized
Income
2. 2012
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