Determine the profit on construction

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Question - On January 1, 2018 The Village of Port Jefferson engaged to Frog Construction company to construct a municipal office complex. The three-year a to receive 10 million in cash payments from the city in three installments: 25% when the project was 30% complete; 25% when the project was 60% complete; and50% when the project was fully complete. The contract required that Frog's completion estimates be certified by an independent consultant before payments were made. During the first year of the contract, Frog completed 30% of the contract and incurred costs of 2,490,000. During the second year, the project was certified as being 60% complete an Frog incurred costs of 3,100,000. During the third year, Frog completed the project and incurred costs of 3,110,000. Assuming Frog had no other revenues or expenses, determine the profit on construction for 2018, 2019, and 2020 under the following methods:

A. Percentage of Completion

B. Completed Contract

C. Which method best represents the profitability of Frog from 2018 to 2020.

Reference no: EM132722559

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