Question

# Nash Construction Company uses the percentage-of-completion method of accounting. In 2017, Nash began work under contract...

Nash Construction Company uses the percentage-of-completion method of accounting. In 2017, Nash began work under contract #E2-D2, which provided for a contract price of \$2,234,000. Other details follow:
 2017 2018 Costs incurred during the year \$615,980 \$1,420,000 Estimated costs to complete, as of December 31 1,005,020 –0– Billings to date 413,000 2,234,000 Collections during the year 351,000 1,530,000

(a)

What portion of the total contract price would be recognized as revenue in 2017? In 2018?

 Revenue recognized in 2017 \$ Revenue recognized in 2018

Revenue recognition is calculated by.

1. Percentage completion

Total expenses incurred / total cost to be incurred

2. Contract value * %completed.

For 2017

1. % completed is .615980/615980+1005020

=615980/1621000 = 38 %

2. Revenue to be recognised is 2234000*38%=\$848920

For 2018

1. % completed is 100 %

Revenue to be recognised bis \$2234000

But recognise already in 2017 is 848920\$

Therefore for 2018 revenue to be recognised is.

2234000-848920 =\$1385080

Pls like if logic explained

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