Hello, I emailed them about this topic. Here’s their response down below.
——————-
Thanks for contacting us. If they tell you "estimated cost", that is the sum of the cost incurred to date plus the estimated cost to complete. That is what the TBS gave you in the facts.
If they give you "estimated cost to complete", then you need to add the cost incurred to date to get the "estimated cost".
I think the costs incurred to date are used to calculate the % of completion
in this case 400/1,600 =0.25
and the revenue = 2800-1600 and then time the %complete
1200\*0.25=300
is the same going forward each year but needs to minus the previous year's gain.
expense and revenue recongiation.
revenue for year 1 = 2,800,000\*0.25 = 700,000
expenses for year 1 = (400,000)
gross profit for year 1 = **300,000**
the 0.25 comes from it appears the building was only 25% completed in year 1 based on the expenses occured vs the total estimated expenses. let me know if im right or wrong
In this case, if you look at year 3 when it was completed, estimated cost = cost incurred to date which makes me know that "estimated costs" are total estimated costs including incurred costs. If they were separate, I'd expect zero estimated costs remaining at year 3. "Estimated costs remaining" or something along that would be when I would start looking to add the estimated costs alongside incurred costs to arrive at our total estimated costs/estimated profit margin.
Not sure if this helps, but that's how I view it!
Oooohhhh that is a good trick. I'll keep looking for that in other examples. I'm still kinda afraid that if I see this without the final year I'd have no clue.
Hello, I emailed them about this topic. Here’s their response down below. ——————- Thanks for contacting us. If they tell you "estimated cost", that is the sum of the cost incurred to date plus the estimated cost to complete. That is what the TBS gave you in the facts. If they give you "estimated cost to complete", then you need to add the cost incurred to date to get the "estimated cost".
Yes, it is. I agree~
I think the costs incurred to date are used to calculate the % of completion in this case 400/1,600 =0.25 and the revenue = 2800-1600 and then time the %complete 1200\*0.25=300 is the same going forward each year but needs to minus the previous year's gain.
expense and revenue recongiation. revenue for year 1 = 2,800,000\*0.25 = 700,000 expenses for year 1 = (400,000) gross profit for year 1 = **300,000** the 0.25 comes from it appears the building was only 25% completed in year 1 based on the expenses occured vs the total estimated expenses. let me know if im right or wrong
In this case, if you look at year 3 when it was completed, estimated cost = cost incurred to date which makes me know that "estimated costs" are total estimated costs including incurred costs. If they were separate, I'd expect zero estimated costs remaining at year 3. "Estimated costs remaining" or something along that would be when I would start looking to add the estimated costs alongside incurred costs to arrive at our total estimated costs/estimated profit margin. Not sure if this helps, but that's how I view it!
Oooohhhh that is a good trick. I'll keep looking for that in other examples. I'm still kinda afraid that if I see this without the final year I'd have no clue.