Ava Limited., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.8 million beginning September 1, 2015, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2017. The following data pertain to the construction period. 2015 2017 Costs to date. Estimated costs to complete $867,000 Cash collected to date 1,683,000 Progress billings to date (non-refundable) 921,000 767,000 2016 $1,804,800 $2,346,000 1,015,200 2,296,000 2,177,000 a) Calculate the amount of revenue to be recognized in 2015 and 2016. 0 2,800,000 2,800,000

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required…