Homework SourseBrady Construction Company contracted to build an apartment
Brady Construction Company contracted to build an apartment complex for a price of $6,900,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.
Costs Incurred During Year
(As of the End of the Year)
Situation
2018
2019
2020
2018
2019
2020
Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)
Gross Profit (loss) Recogonized
Revenue Recogonized over time/Revenue Recogonized upon completed for situation 1-6 years 2018, 2019, 2020
| Estimated Costs to Complete | ||||||||||||
| Costs Incurred During Year | (As of the End of the Year) | |||||||||||
| Situation | 2018 | 2019 | 2020 | 2018 | 2019 | 2020 | ||||||
| 1 | 1,690 | 2,700 | 1,470 | 4,170 | 1,470 | — | ||||||
| 2 | 1,690 | 1,470 | 3,160 | 4,170 | 3,160 | — | ||||||
| 3 | 1,690 | 2,700 | 3,120 | 4,170 | 3,020 | — | ||||||
| 4 | 690 | 3,190 | 1,380 | 4,830 | 970 | — | ||||||
| 5 | 690 | 3,190 | 2,630 | 4,830 | 3,020 | — | ||||||
| 6 | 690 | 3,190 | 3,700 | 6,455 | 3,410 | — | ||||||
Solution
Solution:
Gross Profit when Revenue recgonized over time:
Gross Profit when revenue regonized upon completion:
| Computation of % of Gross Profit - Brady Construction Company (Situation 1) | ||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) | Contract Price (E) | Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) |
| 2018 | $1,690,000 | $1,690,000 | $5,860,000 | 28.84% | $6,900,000 | $1,989,932 | $1,989,932 | $299,932 |
| 2019 | $2,700,000 | $4,390,000 | $5,860,000 | 74.91% | $6,900,000 | $5,169,113 | $3,179,181 | $479,181 |
| 2020 | $1,470,000 | $5,860,000 | $5,860,000 | 100.00% | $6,900,000 | $6,900,000 | $1,730,887 | $260,887 |
