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: Managing Costs 58
Chapter 8: Determining Labor Burden 62
Chapter 9: Managing General 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: Projecting Income 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
beenupdated.
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 has been 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,and 14.
A weekly cash flow problem has been added to Chapter 12.
The income tax regulations in Chapter 13 have been updated to
incorporateprovisions of The Tax Cuts and Jobs Act passed in December
2017.
The project cash flows used to develop an annual cash flow for a construction
company have been expanded to cover the entire project (including work done
inthe prior year) and the calculation of the underbillings/overbillings has been
included in Chapter 14.
The effects of taxes on decision has been updated in Chapter 18 to incorporate
theTax Cuts and Jobs Act.
The Instructor’s Manual includes a list of learning objectives, instructional hints,
suggested 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 to teach the material in a meaningful manner.
Because the courses that use this textbook are quite diverse, it is impossible to organize
the chapters into one best order. Each instructor should consider his or her individual
program and determine which 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: Managing Costs 58
Chapter 8: Determining Labor Burden 62
Chapter 9: Managing General 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: Projecting Income 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
beenupdated.
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 has been 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,and 14.
A weekly cash flow problem has been added to Chapter 12.
The income tax regulations in Chapter 13 have been updated to
incorporateprovisions of The Tax Cuts and Jobs Act passed in December
2017.
The project cash flows used to develop an annual cash flow for a construction
company have been expanded to cover the entire project (including work done
inthe prior year) and the calculation of the underbillings/overbillings has been
included in Chapter 14.
The effects of taxes on decision has been updated in Chapter 18 to incorporate
theTax Cuts and Jobs Act.
The Instructor’s Manual includes a list of learning objectives, instructional hints,
suggested 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 to teach the material in a meaningful manner.
Because the courses that use this textbook are quite diverse, it is impossible to organize
the chapters into one best order. Each instructor should consider his or her individual
program and determine which chapters need to be taught and in what order.
Best wishes,
Steven J. Peterson, MBA, PE
