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Chapter 20

CHAPTER 10 – CONSTRUCTION CONTRACTS

Example 10.1

Step 1 Overall profit/loss on contract

A B C
$000 $000 $000

Contract price 450 378 900

Costs to date (346) (421) (198)
Costs to complete (43) (151) (unknown)
–––– ––––– –––––––

Total estimated profit 61 (194) unknown

Step 2 % completion on work certified basis

A 338/450 = 75%

B 252/378 = 67%

C 180/900 = 20%

Statement of profit or loss (extract)

A B C
$000 $000 $000
Revenue (% × contract price) 338 252 198

Cost of Sales (% × total cost) (292) (446)β (198)
–––––– –––––– –––––

Gross profit/loss 46 (194) –

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