as not Is no refund. Constructing and Assessing Income Statements Using Cost-to-Cost Method Assume GE Hitachi Nuclear Energy agreed in May 2019 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. GE Hitachi estimated that its construction costs would be $600 million. The contract price of $750 million is to be paid as follows: $250 million at the time of signing: $250 million on December 31, 2019; and $250 million at completion in May 2020. GE Hitachi Nuclear Energy incurred the following costs in constructing the generator: $240 million in 2019 and $360 mil- lion in 2020. E5-35. a. Compute the revenue, expense, and income for both 2019 and 2020, and for both years combined, under the company's cost-to-cost revenue recognition method. b. Discuss whether or not we believe the cost-to-cost method provides a good measure of the company's performance under the contract. 36. Constructing and Assessing Income Statemo On March 15 2010 C'I

as not Is no refund. Constructing and Assessing Income Statements Using Cost-to-Cost Method Assume GE Hitachi Nuclear Energy agreed in May 2019 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. GE Hitachi estimated that its construction costs would be $600 million. The contract price of $750 million is to be paid as follows: $250 million at the time of signing: $250 million on December 31, 2019; and $250 million at completion in May 2020. GE Hitachi Nuclear Energy incurred the following costs in constructing the generator: $240 million in 2019 and $360 mil- lion in 2020. E5-35. a. Compute the revenue, expense, and income for both 2019 and 2020, and for both years combined, under the company's cost-to-cost revenue recognition method. b. Discuss whether or not we believe the cost-to-cost method provides a good measure of the company's performance under the contract. 36. Constructing and Assessing Income Statemo On March 15 2010 C'I

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Indiana Company began a construction project in 2024 with a contract price of $165 million to be…

A: Contract accounting might be characterized as "the efficient account of the work done under each…

Q: How much gross profit should be reported for 2021?

A: Percentage-of-Completion Method-: The Percentage of Completion Method comes under the revenue…

Q: 1. Prepare entries to record construction costs and billings for each year

A: It is method used of computing the revenue to be recognize in the current year and the revenue to be…

Q: Calculate the amount of construction costs incurred during 2022.

A: Percentage-of-completion method is used for revenue recognition in case of construction…

Q: Shanahan Construction Company has entered into a contract beginning January 1, 2020, to build a…

A: Percentage of Completion Method: It is a method of revenue recognition, under which revenue from a…

Q: In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC…

A: The objective of the question is to calculate the estimated remaining construction costs on the…

Q: Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000…

A: Journal entry is a primary entry that records the financial transactions initially. The transactions…

Q: National Construction agreed to construct a building for Berninger Corp with construction beginning…

A: Solution: Under percentage of completion method of long term construction contracts, revenue is…

Q: Under the percentage-of-completion method, calculate the construction costs to be expensed in 2024.…

A: The construction costs which are required to be expensed for the year as per the percentage of…

Q: Arizona Desert Homes (ADH) constructed a new subdivision during 2023 and 2024 under contract with…

A: Journal -A journal is a book that is used to record financial activities. It is also referred to as…

Q: On February 1, 2020, Mar Contractors agreed to construct a building at a contract price of…

Q: ov Corporation agreed to build a warehouse for $2,500,000. Expected (and actual) costs for the…

A: Solution:- Calculation of revenues, expenses, and income for each year 2019 through 2021 as…

Q: Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod…

A: Revenue is recognized under a construction contract at different stages as agreed in the contract.…

Q: Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod…

A: 1. Compute Gross Profit or Loss for Each Year - 2024 - Gross Profit (Loss) Recognized: $140,000…

Q: percentage of completion method

A: Gross income for the year = Contract price * Cost incurred during the year/Expected total cost

Q: ta Company is constructing a production complex that qualifies for interest capitalization. The…

A: The computation of the amount of interest cost capitalized of 2019 and 2020 is shown below:-…

Q: Curtiss Construction Company, Incorporated, entered into a fixed-price contract with four-story…

A: Part 1: Compute Gross Profit or Loss for Each Year (Assuming No Revenue Recognition Over Time):Year…

Q: Build a Bridge Inc. prepares its financial statements in accordance with IFRS. The company started…

A: The percentage of completion approach is used to recognise income and expenses related to long-term…

Q: Indiana Co. began a construction project in 2018 with a contract price of $162 million to be…

A: Cost Accounting- It is branch of that ascertains cost associated with the production of certain…

Q: Required: 2,250,000 4,240,000 1. Compute gross profit or loss to be recognized as a result of this…

A: Revenue:The revenue refers to the gross revenue. It is the sum of all the sources where the company…

Q: Beck Construction Company began work on a new building project on January 1, 2023. The project is to…

A: A project is said to be completed when all of the scheduled tasks, activities, and deliverables…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

game has not
After that, there is no refund.
E5-35. Constructing and Assessing Income Statements Using Cost-to-Cost Method
Assume GE Hitachi Nuclear Energy agreed in May 2019 to construct a nuclear generator for NSTAR, a
utility company serving the Boston area. GE Hitachi estimated that its construction costs would be $600
million. The contract price of $750 million is to be paid as follows: $250 million at the time of signing:
$250 million on December 31, 2019; and $250 million at completion in May 2020. GE Hitachi Nuclear
Energy incurred the following costs in constructing the generator: $240 million in 2019 and $360 mil-
lion in 2020.
a. Compute the revenue, expense, and income for both 2019 and 2020, and for both years combined,
under the company's cost-to-cost revenue recognition method.
b. Discuss whether or not we believe the cost-to-cost method provides a good measure of the company s
performance under the contract.
--36. Constructing and Assessing Income Statements Using C
On March 15. 2019, Gilbert Conot
milli

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Indiana Company began a construction project in 2024 with a contract price of $162 million to be received when the project is completed in 2026 During 2024 Indiana incurred $35 million of costs and estimates an additional $15 million of costs to complete the project Indiana recognizes revenue over time and for this project recognizes revenue over time according to the percentage of the project that has been completed in 2025, Indiana incurred additional costs of $59 milion and estimated an additional $38 million in costs to complete the project indiana Note: Do not round intermediate calculations. Multiple Choice recognized $911 milion gross profe on the project in 2025 recognized $9.00 million gross prefit on the project in 2025 ced $3000 mon gress profe on the project in 2025
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000. The project began in 2021 and was completed in 2022 Data relating to the contract are summarized below: 2021 $ 372,000 $1,899,00e 1,488,eee 524,000 318,eee 2022 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2,336,800 2,542, 000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time occording to percentege of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 ssuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented ot the end of 2021 assuming Nortel recognizes revenue over time according to percentege of completion. 4. Prepare a partial…
Garnet Corporation enters into a 4-year construction contract worth $100 million with Gold company on January 1, 2022. At the end of 2022, construction costs totaled $20 million and Garnet estimates $60 million of construction costs remain. If Garnet uses the percent of completion method to determine revenues, how much revenue will Garnet recognize in 2022 related to the construction contract?
On February 1, 2023, Sandhill Contractors agreed to construct a building at a contract price of $3,460,000. The total estimated construction costs would be $1,890,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 Gross profit/ (loss) 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 $ 2,365,000 913,000 1,890,000 1,750,000 2025 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentage complete to 1 decimal place, e.g. 15.2% and final answers to O decimal places, e.g. 5,125.) 2024 -0- 3,460,000 2,950,000 -107450 $ LA 2025 40450
Sheridan Construction Company has entered into a contract beginning January 1, 2025, to build a parking complex. It has been estimated that the complex will cost $596,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $902,000. The following data pertain to the construction period. Costs to date Estimated costs to complete Progress billings to date Cash collected to date (a) $256,280 339,720 270,000 Gross profit recognized in 2025 Gross profit recognized in 2026 2025 Sok and Media 240,000 Gross profit recognized in 2027 $ GA $ LA 2026 Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter O. Do not leave any fields blank.) 5 $429,120 166,880 555,000 505,000 2027 $606,000 902,000 902.000
s
Assume that Crane Construction Company has a non-cancellable contract to construct a $4,640,000 bridge at an estimated cost of $4,176,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. (Note that, by the end of 2024, Crane has revised the estimated total cost from $4,176,000 to $4,228,200.) Assume that progress billings are non-refundable. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year (a1) Account Titles and Explanation (To record cost of construction) (To record progress billings) (To record collections) (To record revenues) 2023 (To record construction expense) 3,173,760 $1,002,240 $2,959,740 $4,228,200 994,000 2024 834,960 1,268,460 2,483,000 Prepare all journal entries required for Crane to account for this contract for 2023. (Credit account titles are automatically indented when the amount is entered. Do not…
Assume that Cullumber Construction Company has a non-cancellable contract to construct a $4,600,000 bridge at an estimated cost of $4,140,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. Assume that progress billings are non-refundable. 2023 2024 2025 Costs to date (12/31) $1,076,400 $2,980,800 $4,657,500 Estimated costs to complete (12/31) 3,063,600 1,676,700 Progress billings during the year 957,000 2,422,000 1.221,000 Cash collected during the year 774,000 1,881,000 1,945,000 The revised estimates for the bridge contract are as follows. 2023 Original Estimates 2024 Revised Estimates Contract price $4,600,000 $4,600,000 Estimated total cost 4,140,000 4,657,500* Estimated gross profit $460,000 Estimated loss $(57,500) *$2,980,800+ $1,676,700 (a1) * Your answer is incorrect. Under the percentage-of-completion method, calculate the total loss in 2024. Total loss in 2024 $ LA 156400
Show all workings?