Reference no: EM132586588

SR Construction Company has entered into a contract beginning January 1, 2010, to build a parking complex. It has been estimated that the complex will cost Tk. 1,100, 000 and will take 3 years to construct. The complex will be billed to the purchasing company at Tk. 1,500,000. The following data pertain to the construction period.

                                                 2010                    2011                   2012

Costs to date                Tk. 770,000          Tk. 950,000     Tk. 1,110,000

Estimated costs to complete  330,000              150,000              -0-

Progress billings to date          700,000          1,000,000        1,500,000

Cash collected to date            540,000           800,000           1,500,000

Instructions

Question (a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

Question (b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.

Question (c) For 2011, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.