Question

. During 2007, Eaton Corp. started a construction job with a total contract price of $7,000,000. It was completed on December 15, 2008. Additional data are as follows: 2007 2008 Actual costs incurred in current year $2,700,000 $3,050,000 Estimated remaining costs 2,700,000 — Billed to customer 2,400,000 4,600,000 Received from customer 2,000,000 4,800,000 Under the completed-contract method, what amount should Eaton recognize as gross profit for 2008?

Answer 1

Answer:

$1,250,000

Explanation:

Calculation to determine what amount should Eaton recognize as gross profit for 2008

Using this formula

2008 Recognized gross profit=Total contract price- 2007 Actual costs incurred in current year -2008 Actual costs incurred in current year

Let plug in the formula

2008 Recognized gross profit=$7,000,000 - $2,700,000 - $3,050,000

2008 Recognized gross profit=$1,250,000

Therefore The amount that Eaton should recognize as gross profit for 2008 is $1,250,000