Percentage of completion method

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Reference no: EM131119610

1. Recognition of Profit and Balance Sheet Amounts for Long-Term Contracts Yanmei Construction Company began operations January 1, 2010. During the year, Yanmei Construction entered into a contract with Lundquist Corp. to construct a manufacturing facility. At that time, Yanmei estimated that it would take 5 years to complete the facility at a total cost of $4,500,000. The total contract price for construction of the facility is $6,000,000. During the year, Yanmei incurred $1,185,800 in construction costs related to the construction project. The estimated cost to complete the contract is $4,204,200. Lundquist Corp. was billed and paid 25% of the contract price. Prepare schedules to compute the amount of gross profit to be recognized for the year ended December 31, 2010, and the amount to be shown as "costs and recognized profit on uncompleted contract in excess of related billings" or "billings on uncompleted contract in excess of related costs and recognized profit" at December 31, 2010, under each of the following methods.

(a) Completed-contract method.

(b) Percentage-of-completion method. Show supporting computations in good form
(AICPA adapted) 

Reference no: EM131119610

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