[skinnyb111]

Hey Guys-

So i am doing the becker questions and for percentage of completion it says to include cost incurred as part of your estimated total cost so for example:

Contract price is 10,000

Cost incurred to date is 2000

Estimated Total cost is 3000

GP= 5,000 (2+3- 10)

However, sometimes the answer is just taking contract price- cost incurred to date how do you know the difference? when to include cost incurred to date and when not?

[Anonymous]

i got another question for ya

A contractor recognizes $42,000 of gross profit on a contract at the end of year one of the contract under the percentage-of-completion method. At the end of year two, the gross profit to be recognized for both years together is $34,000. The total anticipated gross profit on the project estimated at the end of year two is $78,000. What amount of gross profit is to be recognized for year two alone?

A. $78,000

B. $34,000

C. $8,000

D. $0

isnt the answer supposed to be askin how much the loss to recognize, not GP. cuz the answer i put was 0 but it was wrong

[Anonymous]

@skinny I know your post was 5 months ago, but I wanted to leave a response because I don't think your question was answered. I had the same question because I noticed that in the Becker book the percentage of completion examples did not add cost-incurred-to-date to the estimated contract cost to get to total gross profit; but in the homework, cost-incurred-to-date was added to estimated cost to complete to get to total gross profit.

The difference is that the homework question gave the estimated cost to COMPLETE, not the estimated cost of the contract. If the problem gives the estimated cost to complete and the incurred cost-to-date then you will add them together and subtract the total from the contract price which will get you the total expected gross profit.

Hope this helps. I'm in my 2nd go-round with FAR (failed the first time), so I'm studying just like you.

[Anonymous]

@skinny I know your post was 5 months ago, but I wanted to leave a response because I don't think your question was answered. I had the same question because I noticed that in the Becker book the percentage of completion examples did not add cost-incurred-to-date to the estimated contract cost to get to total gross profit; but in the homework, cost-incurred-to-date was added to estimated cost to complete to get to total gross profit.

The difference is that the homework question gave the estimated cost to COMPLETE, not the estimated cost of the contract. If the problem gives the estimated cost to complete and the incurred cost-to-date then you will add them together and subtract the total from the contract price which will get you the total expected gross profit.

Hope this helps. I'm in my 2nd go-round with FAR (failed the first time), so I'm studying just like you.

[Author]

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