Queensbridge Corp

question 86

Essay

Queensbridge Corp. started a contract in June 2011 to build a bridge at a fixed price of $45 million. The bridge was to be completed by October 2013 at a total estimated cost of $35 million. Total cumulative costs incurred by the end of December 2011 and 2012 were $7 million and $24 million, respectively. Because of cost overruns in 2012, it is now expected that the project will cost $5,000,000 more than originally estimated. Final costs at the end of the project totaled $36 million. Queensbridge Corp. follows the guidance in IFRS.
Required:
Determine the amount of gross profit to be recognized for the years ended December 31, 2011 and December 31, 2012.

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Definitions:

Expected Times

Probabilistic estimates of the time durations in which certain events are anticipated to occur.

Chi-Square Test

A statistical test used to examine the differences between categorical variables in a contingency table.

Right-Tailed

Refers to a type of hypothesis test where the area of interest is in the right tail of the probability distribution, usually testing for values greater than a certain number.

Uniformly Distributed

A statistical distribution where all outcomes are equally likely; each variable has the same probability.