Long-Term Construction Contract:
Osborn Construction Company began operations January 2, 2013. During the year, Osborn entered into a contract with Redbeard Razor Corporation to construct a manufacturing facility. At that time, Osborn estimated that it would take 5 years to complete the facility at a total cost of $4,800,000. The total contract price for construction of the facility is $6,000,000. During the year, Osborn incurred $1,250,000 in construction costs related to the construction project. The estimated cost to complete the contract is $3,750,000. Redbeard was billed and paid 30% of the contract price.
Percentage-of-completion method (Computation of Billings on Uncompleted Contract)
Construction costs incurred during the year.
Gross profit recognized during the year.
Total charged to construction in progress.
Partial billings on contract.
Billings on uncompleted contract in excess of related costs.