Queensbridge Corp. started a contract in June 2011 to build a bridge at a fixed price of $45 million. The bridge was to be completed by October 2013 at a total estimated cost of $35 million. Total cumulative costs incurred by the end of December 2011 and 2012 were $7 million and $24 million, respectively. Because of cost overruns in 2012, it is now expected that the project will cost $5,000,000 more than originally estimated. Final costs at the end of the project totaled $36 million. Queensbridge Corp. follows the guidance in IFRS.
Required:
Determine the amount of gross profit to be recognized for the years ended December 31, 2011 and December 31, 2012.

Question

Quizplus · Accepted Answer

The Answer of Queensbridge Corp. started a contract in June 2011 to build a bridge at a fixed price of $45 million. The bridge was to be completed by October 2013 at a total estimated cost of $35 million. Total cumulative costs incurred by the end of December 2011 and 2012 were $7 million and $24 million, respectively. Because of cost overruns in 2012, it is now expected that the project will cost $5,000,000 more than originally estimated. Final costs at the end of the project totaled $36 million. Queensbridge Corp. follows the guidance in IFRS.
Required:
Determine the amount of gross profit to be recognized for the years ended December 31, 2011 and December 31, 2012.