EXERCISE 18-4 (20-25 minutes)

(a)   Gross profit recognized in:

	2004		2005		2006
Contract price		$1,500,000		$1,500,000		$1,500,000
Costs:
Costs to date	$400,000		$935,000		$1,070,000
Estimated costs to         complete	600,000	1,000,000	165,000	1,100,000	0	1,070,000
Total estimated profit		500,000		400,000		430,000
Percentage completed to date		40%*		85%**		100%
Total gross profit recognized		200,000		340,000		430,000
Less: Gross profit recognized in previous years		0		200,000		340,000
Gross profit        recognized in current year		$   200,000		$  140,000		$     90,000

**$400,000 ÷ $1,000,000

**$935,000 ÷ $1,100,000