Accounting for Construction Contracts

Question 1

The computation of the percentage of completion, at the end of any year, considers the cost incurred through the end of that year in both the numerator and denominator., True or False?

Answer 1

True

Question 2

How do you calculate the percentage of completion each year?

Answer 2

1. Degree of Completion:
   (costs to date/ Estimated total cost)
2. Profit to date:
   (Degree of completion xExpected total profit)
3. Profit recognized in current year:
   (profit to date - Previously recognized profit)