Chapter 1: Accounting for construction contracts
Formula:
Overall Costs = Cumulative Actual Costs + Estimamted Costs for Completion
% of Completion = (Actual Cumulative Costs / Overall Costs) * 100%
Estimamted Revenues = Contarct Price
for Revenue a year = revenue total * % of Completion – Previous revenues
Estimated Profit = Total revenue – Overall Costs
Pfor rofit a year = profit Estimated * % of Completion – Previous profits
• Related Accounts:
under contracts progress
year for costs Actual 1
1 year for profit Allocated
year of end Balance 1
Previous year balance
year for costs Actual 2
year for profit Allocated 2
year of end Balance 2
Previous year balance
year for costs Actual 3
year for profit Allocated 3
year of end Balance 3
Income Statement
Allocated r year the for evenues ***
for costs Actual the year (***)
year for profit Allocated ***
Balance Sheet
Cunder ontracts progress balance ***
Progress billings total (***)
Contract net balance ***
Account Recievables ***
Example 1): Amal Co,1/1/2018 started a bridge a up set to ministry the with contract
total a with price of 9,000,000 JD, y thousands)( information following the have ou :
13/21/8120
13/21/9120
13/21/2020
Cumulative Actual costs
2000
2583
2008
Estimamted Costs for Completion
0006
6822
0
Overall Costs
0008
0018
2008
Completion rate
52 %
27 %
001 %
for Revenues each year
0522
0324
2052
Profit for each year
052
398
251
Progress Billing
0081
0048
0042
Cash Collections
0051
0035
0004
Construction in process
2000
year for costs Actual 1
052
1 year for profit Allocated
0522
year of end Balance 1
0522
Previous year balance
2383
year for costs Actual 2
398
year for profit Allocated 2
0648
year of end Balance 2
0648
Previous year balance
3682
year for costs Actual 3
251
year for profit Allocated 3
0009
year of end Balance 3
