Solution Manual For Construction Accounting and Financial Management, 4th Edition by Steven J. Peterson, Complete Chapters 1 - 18, Verified Latest Version

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SOLUTION MANUAL ty




Construction Accounting and Financial Management,
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4th Edition Steven J. Peterson
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Chapters 1 - 18, Complete Newest Version
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CONTENTS
New to the Fourth Edition
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Chapter 1: Construction Financial Management
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Chapter 2: Construction Accounting Systems
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Chapter 3: Accounting Transactions
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Chapter 4: More Construction Accounting
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Chapter 5: Depreciation
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Chapter 6: Analysis of Financial Statements
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Chapter 7: Managing Costs
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Chapter 8: Determining Labor Burden
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Chapter 9: Managing General Overhead Costs
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Chapter 10: Setting Profit Margins for Bidding
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Chapter 11: Profit Center Analysis
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Chapter 12: Cash Flows For Construction Projects
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Chapter 13: Projecting Income Taxes
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Chapter 14: Cash Flows for a Construction Company
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Chapter 15: Time Value of Money
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Chapter 16: Financing a Company’s Financial Needs
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Chapter 17: Making Financial Decisions
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Chapter 18: Income Taxes and Financial Decisions
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New to the Fourth Edition ty ty ty ty




The major changes to the fourth edition include the following
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 The business failure rate for construction companies in Chapterj 1 have b
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eenupdated.
 Sections on cost segregation and bonus depreciation have been added to Chapter 5.
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 The discussion of typical median ratios in Chapter 6 has been updated.
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 A section on the monitoring and controlling process has been added to Chapter 7.
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 A section on managing design-build costs has been added to Chapter 7.
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 The wages, social security, and Medicare costs were updated in Chapters 8,
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9,and 14.
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 A weekly cash flow problem has been added to Chapter 12.
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 The income tax regulations in Chapter 13 have been updated to incorpora
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teprovisions of The Tax Cuts and Jobs Act passed in December 2017. ty ty ty ty ty ty ty t y ty ty ty




 The project cash flows used to develop an annual cash flow for a constru
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ction company have been expanded to cover the entire project (includin
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g work done inthe prior year) and the calculation of the underbillings/ov
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erbillingsj has been included in Chapterj 14. ty ty ty t y ty ty




 The effects ofj taxes on decision has been updated in Chapterj 18 to i
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ncorporate theTax Cuts and Jobs Act. ty ty ty ty ty




The Instructor’s Manual includes a list of learning objectives, instructional hints, suggeste
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d activities, and resources forj each chapter. Files for the figures and tables in the textbo
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ok are found on the instructor’s website. It is my hope that these resources will
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make it easier for course instructors to teach the material in a meaningful manner. Be
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cause the courses that use this textbook are quite diverse, it is impossible to orga
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nize the chapters into one best order. Each instructor should consider his or her indivi
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dual program and determine which chapters need to be taught and in what order.
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Best wishes, ty




Steven J. Peterson, MBA, PE ty ty ty ty




Chapter 1: Construction Financial Management ty ty ty ty




Learning Objectives ty




At the completion of this chapter the student should be able to:
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 Explain why financial management is so important to a construction company.
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 Explain why financial management is different for construction companies than f
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ormost other industries. t y ty




 Understand that all managerial employees from the owner to the crew fore ty t y ty ty ty ty ty ty ty ty ty



personplay a role in financial management ofj a construction company.ty ty t y ty ty ty ty ty ty




Instructional Hints ty




 Compare a construction company to a manufacturing plant. Emphasize the dif
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ferences between a construction company and a manufacturing plant, particu
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larly: construction companies build unique products and the equipment isnot
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usually stationary at single location. These are the reasons a construction co
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mpany needsj a job cost system and an equipment cost system.
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Activities
 Invite a financial manager (for example, an accountant or general manager) fr
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om aconstruction company to your class to discussj their role as a financial ma
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nager.
 Have each student interview a management employee forj a construction com
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pany.The interviews should include owners, project managers, superintenden
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ts, and forepersons. Each student is to find out how the employee contributes
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to the financial management of the company. Discuss their findings in class.
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Instruction Resources ty




 The figures from this chapter in electronic format and PowerPoint slides c
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an befound at the instructor’s website.
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 Data on construction failures can be obtained from the Surety Information
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Office(www.sio.org).
 Current data on construction company failures can be found atj http://www.cen
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sus.gov/ces/dataproducts/bds/data_firm.html. The most useful datacomes from ty ty ty ty ty t



reports that include the sector (e.g., Sector, Firm Age by Sector, and Firm Size b
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y Sector) because construction can be separated from other industries.
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Solutions toj the Textbook Problems
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1. They are: 1) ineffective financial management systems, 2) bank line ofj c
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reditsconstantly borrowed to the limits, 3) poor estimating and/or job co ty ty ty ty ty ty ty ty ty ty



st reporting,
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4) poor project management, and 5) no comprehensive business plan.
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