This is just from my notes I have saved on Evernote, I don't know how much it'll help, but I tried =]
Completed Contract or Percentage of Completion (GAAP)
Completed Contract – no income is recognized until the contract is complete.
Percentage of Completion
Contract Price
– Actual cost to complete (cumulative)
– Estimated costs to complete
Estimated Total Cost
Contract Price – Estimated total cost = Est. income
(actual cost to date / est. total costs to complete) x Est. total income – income recognized to date
Apportionment of total income (based on ratio of costs incurred to date to estimated total construction):
1. (350,000/1,350,000) x 150,000 = 38,889
2. (900,000/1,360,000) x 140,000 = 92,647
-38,889
$53,758
3. Total income to be recognized (actual) 135,000
Less: income recognized to date -92,647
$42,353
Journal Entries
Year 1
Costs of Construction:
Construction in process inventory 350,000
Cash, payables, etc. 350,000
Progress billing:
Accounts Receivable 300,000
Billings on contracts 300,000
(contra account to CIP)
Collections on billings:
Cash 270,000
Accounts Receivable 270,000
Recognition of income:
Construction in process inventory 38,889
Income on construction 38,889
(closed to income summary)
Year 2
Costs of Construction:
Construction in process inventory 550,000
Cash, payables, etc. 550,000
Progress Billing:
Accounts Receivable 575,000
Billing on contracts 575,000
Collections on billings:
Cash 555,000
Accounts Receivable 555,000
Recognition of income:
Construction in process inventory 53,758
Income on construction 53,758
Year 3
Costs of Construction:
Construction in process inventory 465,000
Cash, payables, etc. 465,000
Progress billings (final):
Accounts Receivable 625,000
Billings on contracts 625,000
Collections on billings (in full):
Cash 675,000
Accounts Receivable 675,000
Recognition of income (and to close the accumulated account balances):
Construction in process inventory 42,353
Billings on contracts 1,500,000
Construction in process inventory 1,500,000
Income on construction 42,353
Alternative
Billing on contracts 1,500,000
Construction in process inventory 1,457,647
Income on construction 42,353
recognize a loss immediately
F - F ('12), 90 (Dec '15)
A - F ('12), 73 (Feb '16), ? (July '16)
R - 87 (May '16)
B -
.