Construction Accounting
Zamponi’s Construction Company reports its income for tax purposes on a completed contract basis and income for financial statement purposes on a percentage of completion basis. A record of construction activities for 2008 and 2009 follows:
|
|
|
Cost Incurred— |
Estimated Cost |
Cost Incurred— |
Estimated Cost |
|
Project |
Contract Price |
2008 |
to Complete |
2009 |
to Complete |
|
A |
$1,450,000 |
$840,000 |
$560,000 |
$480,000 |
$ 0 |
|
B |
1,700,000 |
720,000 |
880,000 |
340,000 |
650,000 |
|
C |
850,000 |
160,000 |
480,000 |
431,500 |
58,500 |
|
D |
1,000,000 |
|
|
280,000 |
520,000 |
General and administrative expenses for 2008 and 2009 were $60,000 for each year and are to be recorded as a period cost.
Instructions:
1. Calculate the income for 2008 and 2009 that should be reported for financial statement purposes.
2. Calculate the income for 2009 to be reported on a completed contract basis.