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Curtiss Construction Company, Inc., entered into a fixed price contract with Axelrod by CouponDropDown”>Associates on July 1, 2013, to construct a four story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,000,000. Curtiss appropriately accounts for this contract under the completed contract method in its financial statements. The building was completed on December 31, 2015. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to by CouponDropDown”>complete the contract, and accumulated billings to Axelrod under the contract were as follows: |
| At 12 31 13 | At 12 31 14 | At 12 31 15 | |||||||
| Percentage of completion | 15 | % | 65 | % | 100 | % | |||
| Costs incurred to by CouponDropDown”>date | $ | 245,000 | $ | 2,395,000 | $ | 4,890,000 | |||
| Estimated costs to complete | 2,975,000 | 2,125,000 | 0 | ||||||
| Billings to Axelrod, to date | 650,000 | 1,575,000 | 2,445,000 | ||||||
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Complete the given information below to compute gross profit or loss to be recognized as a result of this contract for each of the three years.
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3.
Assuming the percentage of completion method, compute the amount to be shown in the balance sheet at the end of 2013 and 2014 as either cost in excess of billings or billings in excess of costs.