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compute net income for 2010 using the percentage of completion method 625933

The following contract prices and costs relate to all of Orlando Construction Company”s long-term construction projects (in millions of dollars):


Contract Price

Prior to 2010

In 2010

Cost to Be Incurred in Future Years

On projects completed in 2010





On incomplete projects





General and administrative expenses for 2010 amounted to USD 1,200,000. Assume that the general and administrative expenses are not to be treated as a part of the construction cost.

a. Compute net income for 2010 using the completed-contract method.

b. Compute net income for 2010 using the percentage-of-completion method.

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