Brown Construction Company uses the percentage-of-completion method for long-term construction contracts. A specific job was begun in 2007 and completed in 2009. The contract price was $1,400,000, and cost information as of each year-end is given below:
End of year estimated cost to complete 2007 - $400,000......2008 - $200,000.......2009 - $ 0
Annual cost incurred 2007 - $400,000....2008 - $400,000....2009 - $120,000
Assuming Brown correctly recorded gross profit in 2007, how much gross profit should the company record in 2008? Please show me how to calculate this problem.
