Construction contracts eg 5

Year 1 30% x ( 300 + 500 ) ( costs to date + estimated to complete )

Year 2 Revenue recognised is 65% x 1,000,000 = 650,000
Projected lost is 140,000
Therefore cost to be recognised must be, in total, 750,000

Year 3 100% x 1,200,000 revenue recognised
Costs to be recognised 100% x 990,000 ( includes the 190,000 period specific costs from the first year ( 50,000 ) and the last year ( 140,000 ) )

Does that help?

Thanks, I understand everything EXCEPT the projected loss of 140 . . . how did u arrive at that? was it as follows:
65% of 1 mill= 650g
less) the cost to date minus cost to completion = 500-600 = (100)
to give a cost recognized of (750,000)
Then, the (100) from above, along with the cost recognized of (40) to give (140)?

No - it was by looking at the value of the contract ( $1,000,000 ) and deducting the costs already incurred ( 500 ) and to be incurred ( 600 ) and the period specific costs already incurred ( 40 )

All those costs add up to 1,140 ...... deduct the contract value of 1 million and, Bob's your uncle, there's your projected loss of 140