A Company Entered into a Contract to Construct a Building

question 101

Essay

A company entered into a contract to construct a building for a fee of $50,000. Construction began in 2006 and was completed in 2008. Transactions related to the contract are summarized below: $\begin{array} { | l | l | l | l | } \hline & 2006 & 2007 & 2008 \\\hline \text { Construction costs incurred to date } & \$ 8,000 & \$ 16,600 & \$ 15,900 \\\hline \text { Estimated costs to complete } & 32,000 & 16,400 & - 0 - \\\hline \text { Billings and collections during year } & 7,500 & 20,000 & 22,500 \\\hline\end{array}$ Compute the income that should be recognized each year using (a) the percentage-of-completion method and (b) the completed contract method.
[2006 | 2007 | 2008]
(a) $____________ $_______________ $______________
(b) $____________ $_______________ $______________

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Definitions:

European Colonies

Territories acquired and governed by European powers, often overseas, where they exploited resources and imposed their control over indigenous populations.

Native American Societies

The diverse cultures, languages, and communities of the indigenous peoples of North and South America.

Social Institution

denotes the organized patterns of belief and behavior centered around fundamental social needs, such as families, education, religion, and economic systems.

Skin Color

The pigmentation of someone's skin, primarily determined by genetic inheritance and exposure to the sun, which has historically been used as a basis for social classification and discrimination.