Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000. The project began in 2021 and wes completed in 2022 Data relating to the contract are summerized below: 2821 2022 $ 372,80e $1,899, 80e Costs incurred during the year Estinated costs to complete as of 12/31 Billings during the year Cash collections during the year 1,488,e80 524,000 318, eee 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 according to percentege of completion. 2 Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 essuming this project does not qualify for revenue recognition over time. 3. Prepare a portial balance sheet to show how the information related to this contract would be presented at the end of 2021 Ossuming Nortel recognizes revenue over time sccording to percentage of completion. 4. Prepore a partial balance sheet to show how the informastion related to this contract would be presented at the end of 2021 Ossuming this project does not qualify for revenue recognition over time. Complete this question by entering your answers in the tabs below.
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000. The project began in 2021 and wes completed in 2022 Data relating to the contract are summerized below: 2821 2022 $ 372,80e $1,899, 80e Costs incurred during the year Estinated costs to complete as of 12/31 Billings during the year Cash collections during the year 1,488,e80 524,000 318, eee 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 according to percentege of completion. 2 Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 essuming this project does not qualify for revenue recognition over time. 3. Prepare a portial balance sheet to show how the information related to this contract would be presented at the end of 2021 Ossuming Nortel recognizes revenue over time sccording to percentage of completion. 4. Prepore a partial balance sheet to show how the informastion related to this contract would be presented at the end of 2021 Ossuming this project does not qualify for revenue recognition over time. Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text: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 balance sheet to show how the information related to this contract would be presented ot the end of 2021
assuming this project does not qualify for revenue recognition over time.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Required 4
Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time
according to percentage of completion. (Loss amounts should be indicated with a minus sign. Use percentages as calculated and rounded in the
table below to arrive at your final answer.)
Percentages of completion
Choose numerator
Choose denominator
% complete to date
2021
2022
2021
To date
Recognized in prlor yeara
Recognized in 2021
Construction revenue
Construction expense
Gross profit (loss)
2022
To date
Recognized in prlor yeare
Recognized in 2022
Canstruction revenue
Construction expense
Gross profit (lass)
Required 1
Required 2 >
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