Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. Required 1 Required 2 Required 3 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time. Complete this question by entering your answers in the tabs below. 2024 2025 Construction revenue Construction expense Gross profit (loss) Required 4 Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. Construction revenue Construction expense Gross profit (loss) Note: Use percentages as calculated and rounded in the table below to arrive at your final answer. Loss amounts should be indicated with a minus sign. S 2024 2025 $ 316,000 $1,700,000 1,264,000 400,000 290,000 To date To date 1,660,000 1,770,000 316,000 + S Percentages of completion 1,580,000 = 2024 Recognized in prior years 2025 Recognized in prior years S 555 S S 50 $ $ SS 20.00% Recognized in 2024 Recognized in 2025 0 0 0 0 0 Show less
Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. Required 1 Required 2 Required 3 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time. Complete this question by entering your answers in the tabs below. 2024 2025 Construction revenue Construction expense Gross profit (loss) Required 4 Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. Construction revenue Construction expense Gross profit (loss) Note: Use percentages as calculated and rounded in the table below to arrive at your final answer. Loss amounts should be indicated with a minus sign. S 2024 2025 $ 316,000 $1,700,000 1,264,000 400,000 290,000 To date To date 1,660,000 1,770,000 316,000 + S Percentages of completion 1,580,000 = 2024 Recognized in prior years 2025 Recognized in prior years S 555 S S 50 $ $ SS 20.00% Recognized in 2024 Recognized in 2025 0 0 0 0 0 Show less
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was
completed in 2025. Data relating to the contract are summarized below:
Costs incurred during the year
Estimated costs to complete as of 12/31
Billings during the year
Cash collections during the year
Complete this question by entering your answers in the tabs below.
Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes
revenue over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming 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 at the end of 2024,
assuming Avaya recognizes revenue over time according to percentage of completion.
4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024,
assuming this project does not qualify for revenue recognition over time.
2024
2025
Construction revenue
Construction expense
Gross profit (loss)
Required 1 Required 2 Required 3
Required 4
Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time
according to percentage of completion.
Note: Use percentages as calculated and rounded in the table below to arrive at your final answer. Loss amounts should be indicated with a minus
sign.
Show less
Construction revenue
Construction expense
Gross profit (loss)
$
To date
2024
2025
$ 316,000 $1,700,000
1,264,000
400,000
290,000
To date
316,000 +
+
1,660,000
1,770,000
$
Percentages of completion
0
1,580,000
2024
Recognized in prior years
2025
Recognized in prior years
=
=
$
69 69
69 69
$
20.00%
Recognized in 2024
Recognized in 2025
0
0
0
0
0
0
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Step 1: Define cost allocation
VIEWStep 2: 1) The calculation of the revenue and gross profit as per the percentage of completion method is as
VIEWStep 3: 2) The calculation of the revenue and gross profit as project does not qualify for revenue -
VIEWStep 4: 3) The Presentation of the balance sheet as per percentage of completion method used-
VIEWStep 5: 4) The presentation of balance sheet as per the project does not qualify for revenue recognition -
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