On July 1, 2020, Cusak Construction Company Inc Required:
Using the Percentage of Completion Method, Calculate the Revenue

question 97

Essay

On July 1, 2020, Cusak Construction Company Inc. contracted to build an office building for Candy Lane Corp. for a total contract price of $2,150,000. On July 1, Cusak estimated that it would take between two and three years to complete the building. In October 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Candy Lane in 2020, 2021, and 2022.
$$\begin{array} { | l | r | r | r | } \hline & 2020 & 2021 & 2022 \\\hline \text { Costs incurred to date } & 340,000 & 1,150,000 & 2,400,000 \\\hline \text { Estimated costs to complete } & 1,360,000 & 1,150,000 & 0 \\\hline \text { Billings to Candy Lane } & 590,000 & 1,000,000 & 2,100,000 \\\hline\end{array}$$ Required:
Using the percentage of completion method, calculate the revenue and profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. The company used the cost-to-cost method to estimate the percentage complete.

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Definitions:

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