Answer:
$9.526m
Explanation:
Step 1 - DETERMINE PROFIT OR LOSS UPON COMPLETION
Contract Sum = $163m
Contract cost to date ($37m (in 2018) + $58 (in 2019)) = $95m
Estimate additional cost................,,........................................= $36
TOTAL CONTRACT COSTS ...............................= (95+36) $131m
Profit on contract upon completion (163-131) = .................$32
Step 2 - DETERMINE PERCENTAGE COMPLETION
% Completion of Contract = cost to date/ Total Cost to complete
95/131 = 72.52%
Step 3 - DETERMINE PROFIT TO DATE
Profit to date = % completion * Profit upon completion = 72.52%*32 = $23.21
However in 2018 we recognized some profit which must be subtracted from total profit to date in 2019
2018 Calculations:
Step 1
Contract price = 163
Cost to date = 37+82
Profit = $44m
Step 2
% completion in 2018 = 37/(37+82) = 31.1%
Step 3
Profit recognised in 2018 = 31.1%*44 = $13.684m
Hence 2019 Profit alone = $23.21 - $13.684 = $9.526m