Reference no: EM132586551
In 2010, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was Tk.1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2010, follow.
Balance Sheet
Accounts receivable-construction contract billings Tk.18,000
Construction in progress Tk. 65,000
Less: Contract billings Tk.61,500
Cost of uncompleted contract in excess of billings Tk.3,500
Income Statement
Income (before tax) on the contract recognized in 2010 Tk. 19,500
Instructions
Question (i) How much cash was collected in 2010 on this contract?
Question (ii) What was the initial estimated total income before tax on this contract?
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