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indiana Co. began a construction project in 2018 with a contract price of $164 million to be received when the project is completed in 2020. During 2018, Indiana incurred $39 million of costs and estimates an additional $81 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed.
Suppose that, in 2019, Indiana incurred additional costs of $66 million and estimated an additional $51 million in costs to complete the project. Indiana
2018 Revenue: ($39M/$39M+81M)x$164M=$53.3M;
2019 Revenue: [$39M+$66M/($39M+$66M+$51M)]x$164M-$53.3M=$57.08M
2019 Profit: $57.08M-$66M=-$8.92 loss