Sahtlam
Ltd. (Sahtlam) is a small construction company in northern Ontario.
Sahtlam recently signed a contract to build a new town hall in one of
the region’s larger cities. Sahtlam will receive $26,600,000 from the
city for building the town hall and will have to pay the costs of
construction from that amount.
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Construction
will begin in September 2017 and is expected to be completed in March
2019. Sahtlam’s year-end is December 31. Sahtlam estimates that
construction costs in each year will be:
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| 2017 | 2018 | 2019 | Total | |
| Estimated costs | $4,000,000 | $9,600,000 | $5,000,000 | $18,600,000 |
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The city paid $8,000,000 when the contract was signed and will pay $6,200,000 on January 1, 2018, 2019, and 2020.
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Required:
Calculate
the amount of revenue and expense that Sahtlam would recognize in each
year of the contract using the percentage-of-completion and zero-profit
methods. Assume the actual costs incurred equal the estimated costs. (Do
not round intermediate calculations and round final answers to nearest
whole dollar amount. Enter your percentage answers to 2 decimal places.)
