Constructing and Assessing Income Statements Using Percentage-of Completion
On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collection and contract costs follow ($ millions):
|Year||Cash Collections||Cost Incurred|
|2012||$ 30||$ 25|
|Total||$ 120||$ 85|
(a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the percentage-of-completion revenue recognition method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number.
|Percentage of Completion Method|
|Year||Costs incurred||Percent of total expected costs||Revenue recognized||Income|