Example on completion method, Accounting Basics

Assignment Help:

Q. Example on completion method?

Assume that by the end of the first year (2010) the company had incurred actual construction costs of USD 30 million. These costs are 75 percent of the total approximate construction costs (USD 30 million/USD 40 million = 75 percent). In the percentage-of-completion method the firm would use the 75 percent figure to assign revenue to the first year. In 2011 it acquires another USD 6 million of construction costs. In 2012 it earns the final USD 4 million of construction costs. The amount of revenue to assign to every year is as follows

52_Example on completion method.png

The sum of gross margin to recognize in each year is as follows

1725_Example on completion method1.png

This company would subtract other costs incurred in the accounting period such as general and administrative expenses from gross margin to determine net income. For example assuming general and administrative expenses were USD 100000 in 2010 net income would be (USD 3000000 - USD 100000) = USD 2900000.


Related Discussions:- Example on completion method

Contributed capital, what is the contributed capital and how do you figure ...

what is the contributed capital and how do you figure it out?

Social responsibility accounting, Social Responsibility Accounting: So...

Social Responsibility Accounting: Social responsibility accounting is a modern phase in the development of accounting and owes its birth to rising social awareness that has be

Homework help, #What kinds of risks does a firm like Amazon.com face with r...

#What kinds of risks does a firm like Amazon.com face with respect to safeguarding its assets? What types of controls do you think it already has in place to minimize these risks?

Financial forecasting approaches, Other than the Parsimonious forecasting a...

Other than the Parsimonious forecasting approach, what other financial forecasting approaches are there? Other than the Parsimonious forecasting approach, there are a number of oth

Treatment in accounts, Assume in Balance sheet Furniture is given @ rs.1200...

Assume in Balance sheet Furniture is given @ rs.1200000. and an adjustment tells that half of the building is used for residential purpose... then what is treatment in accounts?

What is difference between super stockist and distributor, Super stockist i...

Super stockist is one who supply product to n no. of distributor in area. Distributor is one who supply to dealers in the area

Determine the specific citation for accounting, Determine the specific cita...

Determine the specific citation for accounting for each of the following items: 1. Accounts receivables from related parties should be shown separately from trade receivables. 2. T

Comparability in accounting information, Q. Comparability in accounting inf...

Q. Comparability in accounting information? When comparability exists reported similarities and differences in financial information are real and not the result of differing ac

Corporate accounting and accounting for sole proprietorship, Q. Corporate a...

Q. Corporate accounting and accounting for sole proprietorship? Several textbook authors use a sole proprietorship and a partnership form of business ownership to exemplify acc

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd