SOLUTION MANUAL
Construction Accounting and Financial Management,
4th Edition Steven J. Peterson
Chapters 1 - 18, Complete Newest Version
Construction Accounting and Financial Management,
, CONTENTS
New to the Fourth Edition 1
Chapter 1: Construction Financial Management 2
Chapter 2: Construction Accounting Systems 4
Chapter 3: Accounting Transactions 7
Chapter 4: More Construction Accounting 23
Chapter 5: Depreciation 34
Chapter 6: Analysis of Financial Statements 50
Chapter 7: ManagingJCosts 58
Chapter 8: Determining Labor Burden 62
Chapter 9: ManagingJGeneral Overhead Costs 65
Chapter 10: Setting Profit Margins for Bidding 67
Chapter 11: Profit Center Analysis 70
Chapter 12: Cash Flows For Construction Projects 75
Chapter 13: ProjectingJIncome Taxes 87
Chapter 14: Cash Flows for a Construction Company 91
Chapter 15: Time Value of Money 93
Chapter 16: Financing a Company’s Financial Needs 99
Chapter 17: Making Financial Decisions 111
Chapter 18: Income Taxes and Financial Decisions 130
Construction Accounting and Financial Management,
, iii
Construction Accounting and Financial Management,
, New to the Fourth Edition
The major changes to the fourth edition include the following
• The business failure rate for construction companies in Chapter 1 have been
updated.
• Sections on cost segregation and bonus depreciation have been added to Chapter 5.
• The discussion of typical median ratios in Chapter 6 has been updated.
• A section on the monitoring and controlling process hasJbeen added to Chapter 7.
• A section on managing design-build costs has been added to Chapter 7.
• The wages, social security, and Medicare costs were updated in Chapters 8, 9,a
nd 14.
• A weekly cash flow problem hasJbeen added to Chapter 12.
• The income tax regulations in Chapter 13 have been updated to incorporate
provisions of The Tax Cuts and Jobs Act passed in December 2017.
• The project cash flowsJused to develop an annual cash flow for a construction co
mpany have been expanded to cover the entire project (including work done inth
e prior year) and the calculation of the underbillings/overbillings has been includ
ed in Chapter 14.
• The effects of taxes on decision has been updated in Chapter 18 to incorporate the
Tax Cuts and JobsJAct.
The Instructor’s Manual includes a list of learning objectives, instructional hints, suggeste
d activities, and resources for each chapter. Files for the figures and tables in the textbook
are found on the instructor’s website. It is my hope that these resources will make it easier
for course instructors toJteach the material in a meaningful manner. Because the courses t
hat use this textbook are quite diverse, it is impossible to organize the chapters into one b
est order. Each instructor should consider his or her individual program and determine whi
ch chapters need to be taught and in what order.
Best wishes,
Steven J. Peterson, MBA, PE
Construction Accounting and Financial Management,
4th Edition Steven J. Peterson
Chapters 1 - 18, Complete Newest Version
Construction Accounting and Financial Management,
, CONTENTS
New to the Fourth Edition 1
Chapter 1: Construction Financial Management 2
Chapter 2: Construction Accounting Systems 4
Chapter 3: Accounting Transactions 7
Chapter 4: More Construction Accounting 23
Chapter 5: Depreciation 34
Chapter 6: Analysis of Financial Statements 50
Chapter 7: ManagingJCosts 58
Chapter 8: Determining Labor Burden 62
Chapter 9: ManagingJGeneral Overhead Costs 65
Chapter 10: Setting Profit Margins for Bidding 67
Chapter 11: Profit Center Analysis 70
Chapter 12: Cash Flows For Construction Projects 75
Chapter 13: ProjectingJIncome Taxes 87
Chapter 14: Cash Flows for a Construction Company 91
Chapter 15: Time Value of Money 93
Chapter 16: Financing a Company’s Financial Needs 99
Chapter 17: Making Financial Decisions 111
Chapter 18: Income Taxes and Financial Decisions 130
Construction Accounting and Financial Management,
, iii
Construction Accounting and Financial Management,
, New to the Fourth Edition
The major changes to the fourth edition include the following
• The business failure rate for construction companies in Chapter 1 have been
updated.
• Sections on cost segregation and bonus depreciation have been added to Chapter 5.
• The discussion of typical median ratios in Chapter 6 has been updated.
• A section on the monitoring and controlling process hasJbeen added to Chapter 7.
• A section on managing design-build costs has been added to Chapter 7.
• The wages, social security, and Medicare costs were updated in Chapters 8, 9,a
nd 14.
• A weekly cash flow problem hasJbeen added to Chapter 12.
• The income tax regulations in Chapter 13 have been updated to incorporate
provisions of The Tax Cuts and Jobs Act passed in December 2017.
• The project cash flowsJused to develop an annual cash flow for a construction co
mpany have been expanded to cover the entire project (including work done inth
e prior year) and the calculation of the underbillings/overbillings has been includ
ed in Chapter 14.
• The effects of taxes on decision has been updated in Chapter 18 to incorporate the
Tax Cuts and JobsJAct.
The Instructor’s Manual includes a list of learning objectives, instructional hints, suggeste
d activities, and resources for each chapter. Files for the figures and tables in the textbook
are found on the instructor’s website. It is my hope that these resources will make it easier
for course instructors toJteach the material in a meaningful manner. Because the courses t
hat use this textbook are quite diverse, it is impossible to organize the chapters into one b
est order. Each instructor should consider his or her individual program and determine whi
ch chapters need to be taught and in what order.
Best wishes,
Steven J. Peterson, MBA, PE
