The following contract prices and costs relate to all of Orlando Construction Company”s long-term construction projects (in millions of dollars):
|
Contract Price |
Prior to 2010 |
In 2010 |
Cost to Be Incurred in Future Years |
|
|
On projects completed in 2010 |
$46 |
$4 |
$36 |
$0 |
|
On incomplete projects |
144 |
24 |
48 |
48 |
General and administrative expenses for 2010 amounted to USD 1,200,000. Assume that the general and administrative expenses are not to be treated as a part of the construction cost.
a. Compute net income for 2010 using the completed-contract method.
b. Compute net income for 2010 using the percentage-of-completion method.