Question - Long-Term Contract with an Overall Loss
On July 1, 2010, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000. On July 1, Torvill estimated that it would take between 2 and 3 years to complete the building. On December 31, 2012, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2010, 2011, and 2012.
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At 12/31/10
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At 12/31/11
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At 12/31/12
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Contract costs incurred to date
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$ 300,000
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$1,200,000
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$2,100,000
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Estimated costs to complete the contract
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1,200,000
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800,000
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-0-
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Billings to Gumbel
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300,000
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1,100,000
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1,850,000
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