Assignment
B.C. Bridges Inc. was contracted to build an overpass for the Horseshoe Bay Ferry Terminal. The contracthad a fixed price of $1,200,000. The over pass would take four years to build. B.C. Bridges Inc. received a depositof $150,000 onsigning the contract in 20X10. During the course of construction, B. C. Bridges Inc. experienced and estimated costs as follows:
December 31, 20X10 Total costs incurred to date
|
December 31, 20X10
|
Total costs incurred to date
Estimated additional costs to complete construction
|
$175,000
$600,000
|
|
December 31, 20X11
|
Total costs incurred to date
Estimated additional costs to complete construction
|
$450,000
$500,000
|
|
December 31, 20X12
|
Total costs incurred to date
Estimated additional costs to complete construction
|
$800,000
$450,000
|
|
December 31, 20X13
|
Total costs incurred to date
Estimated additional costs to complete construction
|
$1,100,000
$0 as contract is
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Required:
a. Calculate the gross profit B. C. Bridges Inc. should recognize under the % of completion method for each year of the contract.
b. What gross profit would be recognized in 20X12 and 20X13 under the completed contract method?