Ltwk3 - 2009. (Ignore income taxes.) 2007 2008 2009...

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Ltwk3 Problems P18-7 (Long-Term Contract with an Overall Loss) On July 1, 2007, Kyung-wook Construction Company Inc. contracted to build an office building for Mingxia Corp. for a total contract price of $1,950,000. On July 1, Kyung-wook estimated that it would take between 2 and 3 years to complete the building. On December 31, 2009, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Mingxia for 2007, 2008, and 2009. At At At 12/31/07 12/31/08 12/31/09 Contract costs incurred to date $ 150,000 $1,200,000 $2,100,000 Estimated costs to complete the contract 1,350,000 800,000 –0– Billings to Mingxia 300,000 1,100,000 1,850,000 Instructions (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2007, 2008, and
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Unformatted text preview: 2009. (Ignore income taxes.) 2007 2008 2009 Contract Price 1,950,000 1,950,000 1,950,000 Less Estimated Cost: Cost to date 150,000 1,200,000 2,100,000 Estimated Cost to Complete 1,350,000 800,000 Estimated Total Cost 1,500,000 2,000,000 2,100,000 Estimated Gross Profit/loss 450,000-50,000-150,000 Percent Complete 10% 60% 100% 150000/1500000 1200000/2000000 2100000/2100000 (b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 2007, 2008, and 2009. (Ignore income taxes.) 2007 2008 2009 Contract Price 1,950,000 1,950,000 1,950,000 Less Estimated Cost: Cost to date--------2,100,000 Estimated Cost to Complete--------Estimated Total Cost--------2,100,000 Estimated Gross Profit/loss---------150,000...
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Ltwk3 - 2009. (Ignore income taxes.) 2007 2008 2009...

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