Use the following information for questions 83 and 84.
Eilert Construction Company had a contract starting April 2015, to construct a $21,000,000 building that is expected to be completed in September 2016, at an estimated cost of $19,250,000. At the end of 2015, the costs to date were $8,855,000 and the estimated total costs to complete had not changed. The progress billings during 2015 were $4,200,000 and the cash collected during 2015 was $2,800,000. Eilert uses the percentage-of-completion method.
-At December 31, 2015, Eilert would report Construction in Process in the amount of
A) $9,660,000.
B) $8,855,000.
C) $8,260,000.
D) $805,000.

Question

Quizplus · Accepted Answer

The Construction in Process (CIP) at December 31, 2015, is calculated using the percentage-of-completion method. First, determine the percentage of completion by dividing the costs to date ($8,855,000) by the estimated total costs ($19,250,000), which gives approximately 46%. Then, apply this percentage to the total contract value ($21,000,000) to find the revenue recognized to date, which is about $9,660,000. This amount represents the Construction in Process at the end of 2015.

Use the Following Information for Questions 83 and 84