Percentage-Of-Completion and Completed-Contract Methods
on June 15, 2020, Lion Construction

Essay

Percentage-of-completion and completed-contract methods
On June 15, 2020, Lion Construction signed a $ 360,000 contract to build a small building. Lion estimated that the total cost would be $ 320,000. Construction started immediately because the required completion date was August 31, 2021. Lion’s relevant data relating to this construction project were as follows:
$\begin{array}{c}\begin{array}{lll}\\\text {Actual costs incurred}\\\text {Estimated costs to complete}\\\text {Progress billings}\\\text {Collections} \end{array}\begin{array}{r}\underline{2020}\\\$ 120,000 \\200,000 \\112,000 \\110,000 \end{array}\begin{array}{r}\underline{2021}\\\$ 204,000\\-0- \\248,000 \\250,000\end{array}\end{array}$

Instructions
Calculate how much gross profit that Lion should recognize each year, assuming:

$\quad$ $\quad$ Method Used $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ For 2020 $\quad$ For 2021
a) Completed contract
b) Percentage-of-completion