1. Seasons Construction is constructing an office building under contract for Cannon Company.
The contract calls for progress billings and payments of $930,000 each quarter. The total contract
price is $11,160,000 and Seasons estimates total costs of $10,650,000. Seasons estimates that the
building will take 3 years to complete, and commences construction on January 2, 2012.
At December 31, 2013, Seasons Construction estimates that it is 75% complete with the
building; however, the estimate of total costs to be incurred has risen to $10,800,000 due to
unanticipated price increases. What is the total amount of Construction Expenses that Seasons
will recognize for the year ended December 31, 2013?
2. Eilert Construction Company had a contract starting April 2013, to construct a $18,000,000
building that is expected to be completed in September 2014, at an estimated cost of
$16,500,000. At the end of 2013, the costs to date were $7,590,000 and the estimated total costs
to complete had not changed. The progress billings during 2013 were $3,600,000 and the cash
collected during 2013 was $2,400,000. Eilert uses the percentage-of-completion method.
At December 31, 2013, Eilert would report Construction in Process in the amount of