Frame Construction Company's contract requires the construction of a bridge in 3 years. The expected total cost of the bridge is $2,000,000, and Frame will receive $2,500,000 for the project. The actual costs incurred to complete the project were $500,000, $900,000, and $600,000, respectively, during each of the 3 years. Progress payments received by Frame were $600,000, $1,200,000, and $700,000, respectively. Assuming that the percentage-of-completion method is used, what amount of gross profit would Frame report during the last year of the project?
A.
$120,000
B.
$125,000
C.
$140,000
D.
$150,000
expected gross profit = 500,000 (2.5 m – 2m)
Actual project costs = (500k+900k+600k)= 2 m
Y1 % completion = 500k/2m = 25% –> cumulative profit = 25% * 500K = $ 125 k
Y2 % complettion = (500k+900k)/2m = 70%–> cumulative profit = 70% * 500k = 350 K
Y3 % completion = 100%-70% = 30% –> cumulative profit =30% * 500K = 150 K
why don't you deduct the previous income from year 2 & 3 ????????
FAR 06/09/2016 | 2014 (42) Didn't Study for it | 2015 (54)
Audit (66) i was expecting (99)
will Ninja MCQs make the difference in 09 June, Lets wait!
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