Colorado Inc. constructed a factory during 2020 and 2021 under contract with Pacific Machinery Co. Relevant data are summarized below: Contract price Cost Gross profit Contract billings $3,000,000 2020 1,200,000 2021 600,000 2020 800,000 2021 400,000 2020 1,500,000 2021 1,500,000 Colorado Inc. recognizes revenue over time with respect to this contract. In its December 31, 2020, balance sheet, Colorado would report: ● The contract asset, cost and profit in excess of billings, $500,000. The contract liability, billings in excess of cost, of $300,000. The contract asset, contract amount in excess of billings, of $1,500,000. The contract asset, deferred profit, of $400,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Colorado Inc. constructed a factory during 2020 and 2021 under contract with Pacific Machinery
Co. Relevant data are summarized below:
Contract price
Cost
Gross profit
Contract billings
$3,000,000
2020
1,200,000
2021
600,000
2020
800,000
2021
400,000
2020
1,500,000
2021
1,500,000
Colorado Inc. recognizes revenue over time with respect to this contract. In its December 31,
2020, balance sheet, Colorado would report:
● The contract asset, cost and profit in excess of billings, $500,000.
The contract liability, billings in excess of cost, of $300,000.
The contract asset, contract amount in excess of billings, of $1,500,000.
The contract asset, deferred profit, of $400,000.
Transcribed Image Text:Colorado Inc. constructed a factory during 2020 and 2021 under contract with Pacific Machinery Co. Relevant data are summarized below: Contract price Cost Gross profit Contract billings $3,000,000 2020 1,200,000 2021 600,000 2020 800,000 2021 400,000 2020 1,500,000 2021 1,500,000 Colorado Inc. recognizes revenue over time with respect to this contract. In its December 31, 2020, balance sheet, Colorado would report: ● The contract asset, cost and profit in excess of billings, $500,000. The contract liability, billings in excess of cost, of $300,000. The contract asset, contract amount in excess of billings, of $1,500,000. The contract asset, deferred profit, of $400,000.
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