Haft construction co. has consistently used the percentage-of-completion method. on january 10, year 3, haft began work on a $3 million construction contract. at the inception date, the estimated cost of construction was $2,250,000. the following data relate to the progress of the contract:
gross profit recognized at 12/31/yr 3 $ 300,000
costs incurred 1/10/yr 3 through 12/31/yr 4 1,800,000
estimated cost to complete at 12/31/yr 4 600,000
in its income statement for the year ended december 31, year 4, what amount of gross profit should haft report?

The answer is: Halt should report $150,000 as gross profit

Explanation:

Halt recognized $300,000 as gross profit for Yr 3.

By December 31, Yr 4, Halt had completed 75% of the construction project: ($1,800,000 spent / $1,800,000 + $600,000 cost to complete) x 100 = 75%

Halt anticipated $600,000 as gross profit ($3,000,000 contract price - $2,400,000 expected costs).

To determine the gross profit for Yr 4:

gross profit Yr 4 = ($600,000 total gross profit x 75% completion rate) - $300,000 previously recognized gross profit = $450,000 - $300,000 = $150,000

2,283,000

explanation:

i just had to add it