Question & Answer: Completion in may 2014. Aggreko incurred the following costs in constructing the power plant…..

Completion in may 2014. Aggreko incurred the following costs in constructing the power plant. euro100 million in 2013, and euro 300 million in 2014. a. Compute the amount of Aggreko’s revenue, expense, and income for both 2013 and 2014 under the percentage-of-completion revenue recognition method. b. Compute the amount of Aggreko’s revenue, expense, and income for both 2013 and 2014 using the cost-recovery method. c. Discuss whether you believe that the percentage of completion method or the cost-recovery method provides a good measure of Aggreko’s performance under the contract. Constructing and Assessing Income Statement Using Percentage of Completion On March 15, 2014. Frankel Construction contracted to build a shopping centre at a contract price of $120 million. The schedule of expected (equals actual) cash collections and contract costs follows: a. Calculate the amount of revenue, expense, and income for each of the three years 2014 through 2016 using (1) the percentage-of completion method, and (2) the cost-recovery method. Which method most closely follows the cash flows produced by this project? b. Discuss which method you believe provides the best measure of the construction company’s performance under this contract.