Calculate the amount of revenue, expense

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On March 15, 2010, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (equals actual) cash collections and contract costs follows:

Year Cash Collections Cost Incurred

2010 $30 million $15 million

2011 50 million 40 million

2012 40 million 30 million

Total $120 million $85 million

a. Calculate the amount of revenue, expense, and income for each of the three years 2010 through 2012 using (1) the percentage-of-completion method, (2) the completed contract method, and (3) the installment method.

b. Discuss which method you believe provides the best measure of the construction company's performance under this contract.

Reference no: EM13120085

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