OConners Company began operations on January 1, 2017. During the year, OConners entered into a...
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OConners Company began operations on January 1, 2017. During the year, OConners entered into a non-cancellable contract with Motley Corp. to construct a manufacturing facility. At that time, OConners estimated that it would take five years to complete the facility at a total cost of $4,140,000. The total contract price for construction of the facility is $5,520,000. During the year, OConners incurred $1,090,936 in construction costs related to the construction project. The estimated cost to complete the contract is $3,867,864. Motley Corp. was billed and paid 25% of the contract price. The billings are non-refundable. Prepare schedules to calculate the amount of gross profit to be recognized for the year ended December 31, 2017, and the amount to be shown as contract assets or liabilities at December 31, 2017, under each of the following methods
Completed-contract method.
Percentage-of-completion method.
Here are the list of accounts:
1380000 Construction costs incurred during the year 1090936 Contract liability 289064
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