Constructing and Assessing Income Statements Using Cost-to-Cost Method On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collections and contract costs follow ($ millions): Year Cash Collections Cost Incurred 2012 $ 10 2013 25 2014 50 Total $85 $ 30 50 40 $ 120 (a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the cost-to-cost method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number. Enter $ answers in millions. Costs Year incurred 2012 $ 2013 2014 10 25 50 $85 Cost-to-CostMethod Percent of total expected costs 12% 29% 59% Revenue recognized Income $ 30 $ 50 40 $120 4 10 21 $35

Constructing and Assessing Income Statements Using Cost-to-Cost Method On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collections and contract costs follow ($ millions): Year Cash Collections Cost Incurred 2012 $ 10 2013 25 2014 50 Total $85 $ 30 50 40 $ 120 (a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the cost-to-cost method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number. Enter $ answers in millions. Costs Year incurred 2012 $ 2013 2014 10 25 50 $85 Cost-to-CostMethod Percent of total expected costs 12% 29% 59% Revenue recognized Income $ 30 $ 50 40 $120 4 10 21 $35

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 48P

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

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Constructing and Assessing Income Statements Using Cost-to-Cost Method
On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which
equals actual) cash collections and contract costs follow ($ millions):
Year Cash Collections Cost Incurred
2012
$ 10
2013
25
2014
50
Total
$85
$ 30
50
40
$ 120
(a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the cost-to-cost method.
Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and
income to the nearest whole number.
Enter $ answers in millions.
Costs
Year incurred
2012 $
2013
2014
10
25
50
$85
Cost-to-CostMethod
Percent
of total
expected
costs
12%
29%
59%
Revenue
recognized Income
$
30 $
50
40
$120
4
10
21
$35

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Constructing and Assessing Income Statements Using Cost-to-Cost Method On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collections and contract costs foll- millions): Year Cash Collections Cost Incurred 2012 2013 2014 Total $30 50 40 $ 120 (a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the cost-to-cost method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number. Enter $ answers in millions. Costs Year incurred 2012 $ 2013 2014 $15 40 30 $85 20 x 30 x 35 x $85 Cost-to-CostMethod Percent of total expected costs Revenue recognized 24% x $ 35% x 41% X 29 × $ 42 x 49 x $120 Income 9 x 12 x 14 x $35
Constructing and Assessing Income Statements Using Cost-to-Cost Method On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collections and contract costs follow ($ millions): Year Cash Collections Cost Incurred 2012 2013 2014 Total $30 50 40 $ 120 Costs Year incurred 2012 $ 2013 2014 (a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the cost-to-cost method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number. Enter $ answers in millions. $30 35 20 $85 $85 Cost-to-Cost Method Percent Revenue of total expected costs recognized 96 $ %6 % $120 $ Income $35 (b) Which of the following statements best summarizes our conclusion about the usefulness of the cost-to-cost method for this company? OThe…
Please walk through problem
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