Explain the percentage of completion method


Response to the following problem:

Andre Agassi Construction Company began operations Jan 1, 2008. During the year, Andre Agassi Construction entered into a contract with Lindsey Davenport Corp to construct a manufacturing facility. At that time, Agassi estimated that it would take 5 years to complete the facility at a total cost of $4,500,000. The total contract price for construction of the facility is $6,300,000. During the year, Agassi incurred $1,1185,800 in construction costs related to the construction project. The estimated cost to complete the contract is $4,204,200. Lindsey Davenport Corp. was billed and paid 30% of the contract price.

Directions:

A- Complete-contract method

B- Percentage-of-completion method

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Cost Accounting: Explain the percentage of completion method
Reference No:- TGS02079642

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