Long-Term Construction Contracts:
Forman Company has contracted to build a dam over a period of 4 years for $3,000,000. Information relating to the performance of the contract is summarized as follows:
1. a. Compute the profit or loss for each year of the contract under the percentage-of-completion method. Enter losses as a negative number.
b. Compute the profit or loss for each year of the contract under the completed-contract method. Enter losses as a negative number.
2. a. Prepare the relevant sections of the income statement for each year under the percentage-of-completion method.