P18-2. Recognition of Profit on Long-Term Contract)
P18-2 Shanahan Construction Company has entered into a contract beginning January 1, 2014, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period.
Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.
Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.
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