Calculate the amount of construction costs incurred during 2022.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 9MC
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Question
Kiddo Construction Company uses the percentage-of-completion method. During 2021, the company entered into a fixed-price contract to construct a building for Massy Group of Companies for $30,000,000. The following details pertain to the contract:
At December 31, 2021 At December 31, 2022
Percentage of completion 25% 60%
Estimated total cost of contract $22,500,000 $25,000,000
Gross profit recognized to date 1,875,000 3,000,000
Calculate the amount of construction costs incurred during 2022.
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