Question

Cullumber Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $2150000 each quarter. The total contract price is $25800000 and Cullumber estimates total costs of $18350000. Cullumber estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2022, Cullumber Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $18600000 due to unanticipated price increases. Cullumber Construction completes the remaining 25% of the building construction on December 31, 2023, as scheduled. At that time the total costs of construction are $19350000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that Cullumber will recognize for the year ended December 31, 2023

Answer 1

See bow

Step-by-step explanation:

With regards to the above

the revenue to be recognized at the year end is

= 25% × $25,800,000

= $6,450,000

The cost to recognized is

= 25% × $19,350,000

= $4,837,500