Question - On July 1, 2017, Indigo Construction Company Inc. contracted to build an office building for Gmbel Comp for a total contract price of$1,910,000. On July 1, Indigo estimated that it would take between 2 and 3 years to complete the building. On December 31, 2019, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2017, 2018, and 2019.
12/31/17 12/31/18 12/31/19
contract costs incurred to date $302,000 $1,105,500 $2,115,200
estimated costs to complete the contract $1,208,000 904,500 0
Billings to Gumbel 300,000 1,080,000 1,860,000
(a) Using the percentage of completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended Dec 31, 2017,2018, and 2019 (ignore income tax)
(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the year ended in Dec 31, 2017, 2018, and 2019. (ignore income taxes)