Question

Georgia Co. began a construction project in 2021 with a contract price of $162 million to...

Georgia Co. began a construction project in 2021 with a contract price of $162 million to be received when the project is completed in 2023. During 2021, Georgia incurred $30 million of costs and estimates an additional $82 million of costs to complete the project. Georgia recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed.

  

In 2022, Georgia incurred additional costs of $59 million and estimated an additional $38 million in costs to complete the project. Indiana (Do not round your percentage calculated):

Recognized $10.00 million gross profit on the project in 2022.

Recognized $35.00 million gross profit on the project in 2022.

Recognized $11.14 million gross profit on the project in 2022.

Recognized $33.50 million gross profit on the project in 2022.

Homework Answers

Answer #1
  • Correct Answer = Option #3

Recognized $11.14 million gross profit on the project in 2022. [Closest to $ 11.13 calculated below]

  • Working

2021

2022

Contract Price

$162

$162

Cost Incurred to Date

$30

$89

Estimated cost yet to be incurred to complete the contract

$82

$38

Total Cost

$112

$127

% of Completion

26.79%

70.08%

Revenue to date

$43.39

$113.53

Revenue of Previous year

$0.00

$43.39

Net Revenue this year

$43.39

$70.13

Cost to date

$30.00

$89.00

Cost to date of previous year

$0.00

$30.00

Net Cost for the year

$30.00

$59.00

Gross Profits

$13.39

$11.13


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