Assume That Madison Corp

question 40

Essay

Assume that Madison Corp.has agreed to construct a new basketball arena for Gator Town for $70 million dollars.Construction of the new arena begins in July,2012 and is expected to be completed in March 2009.At the signing of the contract Madison Corp.estimates that the new arena will cost $60 million dollars to build.Given the following cost and building schedule determine the cumulative degree of completion and how much revenue and gross margin Madison Corp.should recognize in years 2012,2013 and 2014.
$\begin{array} { l l l } & \text { Casts incurred } & \text { Estimated casts } \\\text { Year } & \text { to date } & \text { remainine } \\2012& \$ 18,000,000 & \$ 42,000,000 \\2013 & \$ 48,000,000 & \$ 12,000,000\\2014 &\$ 600.000&\$0\\\end{array}$