BUILDING COMPANY provided the following information about one of it's construction contracts (CONTRACT XY): Cost incurred to date: $500,000 Cost to complete: $2,500,000 Contract price = Total Cost Plus $1,000,000 Amount paid to date by client: $100,000 How much revenue should BUILDING COMPANY recognize on CONTRACT XY? How much PROFIT/LOSS should BUILDING COMPANY recognize on CONTRACT XY?

BUILDING COMPANY provided the following information about one of it's construction contracts (CONTRACT XY): Cost incurred to date: $500,000 Cost to complete: $2,500,000 Contract price = Total Cost Plus $1,000,000 Amount paid to date by client: $100,000 How much revenue should BUILDING COMPANY recognize on CONTRACT XY? How much PROFIT/LOSS should BUILDING COMPANY recognize on CONTRACT XY?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A construction company entered into a fixed-price contract to build a soccer stadium for $15,000,000. Construction costs incurred during the first year were $3,675,000, and estimated costs to complete at the end of the year were $6,825,000. The company recognizes revenue over time according to percentage of completion. Fixed-price contract amount: $15,000,000 Construction costs incurred in first year: $3,675,000 Estimated costs to complete at end of first year: $6,825,000 How much revenue and gross profit or loss will appear in the company’s income statement in the first year of the contract? Percentage of completion at end of first year Revenue Gross profit (loss) Nothing in this area will be graded, but it will be submitted with your assignment.
Sandhill Communications contracted to set up a call center for the City of Phoenix. Under the terms of the contract, Sandhill Communications will design and set-up a call center with the following costs: Design of call center $18000 Computers, servers, telephone equipment $510000 Software $150000 Installation and testing of equipment $26000 Selling commission $46000 Annual service contract $80000 In addition, Sandhill Communications will maintain and service the equipment and software to ensure smooth operations of the call center for an annual fee of $160000. Ownership of equipment installed remains with the City of Phoenix. The contract costs that should be capitalized is $678000. $830000. $660000. $750000.
A contractor is assembling a bid for a lump-sum building project. The summation of all task costs is $15,000,000. Annual company revenue is $400 million, and annual home office costs are $25 million. Total job office overhead is estimated to be $3 million and desired profit is 11%. Include O&P, what lump-sum price should the contractor bid?
Bella Construction Co. uses the percentage-of-completion method. In 20x1, Bella began work on a contract for $2,477,005; it was completed in 20x2. The following cost data pertain to this contract: Year ended December 31, 20x1 Year ended December 31, 20x2 Costs incurred during the year $869,041 $559,369 Estimated costs to complete at the of year $494,825 - The amount of gross profit to be recognized on the income statement for the year ended December 31, 20x2 is: a. $553,770 b. $339,315 c. $1,048,595 d. $1,113,139
During 2007, Frank Corp. started a construction job with a total contract price of $2,800,000. It was completed on December 15, 2008. Additional data are as follows: 2007 2008 Actual costs incurred in current year $1,080,000 $1,220,000 Estimated remaining costs 1,080,000 — Billed to customer 960,000 1,840,000 Received from customer 800,000 1,920,000 Under the completed-contract method, what amount should Frank recognize as gross profit for 2008? Group of answer choices 500,000 $250,000 $180,000 $380,000
A construction company entered into a fixed-price contract to build an office building for $42 million. Construction costs incurred during the first year were $12 million, and estimated costs to complete at the end of the year were $28 million. The company recognizes revenue over time according to percentage of completion. How much revenue and gross profit or loss will appear in the company's income statement in the first year of the contract? Note: Enter your answers in whole dollars and not in millions (i.e., $4 million should be entered as $4,000,000). Revenue
A Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: Contract revenue Materials Contract X Contract Z $ 260,000 $ 200,000 10,000 10,000 Labor costs 88,000 120,000 Depreciation on 8,000 10,000 equipment Cost incurred for 1,500 1,500 consulting advice Allocated portion of overhead 5,000 3,000 The equipment was purchased last year and has no resale value. Which of these amounts is relevant for the selection of one contract over another? OA. Contract revenue and labor costs OB. Materials, consulting advice, and allocated overhead OC. Cost of consulting advice and allocated overhead OD. Contract revenue, labor costs, depreciation on equipment and allocated portion of overhead OE. None of the above