Brutus Construction started work on a new high rise building on January 1, 2016, The project completion date is December 2018. The contract price is $54,000,000. The following are the actual costs incurred and estimates of cost to complete the project

Years
Actual costs incurred
Estimated costs to complete
2016
$15,000,000
$30,000,000
2017
22,500,000
22,500,000
2018
17,500,000
-0-

Calculate gross profit or loss for each year using the completed-contract method.

What will be an ideal response?

Answer:
Year
GP or Loss
Supporting Computations
2016
$-0-
No profit recognized
2017
($6,000,000)
($54 - 60) = $6 anticipated loss
2018
$5,000,000
($54 - 55) = Total $1,000,000 loss—$5,000,000 recaptured