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

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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…
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