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What is the total amount of construction expenses

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Sandhill Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1500000 each quarter. The total contract price is $18870000 and Sandhill estimates total costs of $18300000. Sandhill estimates that the building will take 3 years to complete, and commences construction on January 2, 2018.

Question 1: At December 31, 2019, Sandhill Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $17650000 due to unanticipated price increases. What is the total amount of Construction Expenses that Sandhill will recognize for the year ended December 31, 2019?

  • $9007500
  • $13237500
  • $8520000
  • $8662500

Reference no: EM132472089

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