Curtiss Construction Company, Incorporated, entered into a fixed-price contract with four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,480,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date At 12-31-2024 At 12-31-2025 10% $ 367,000 3,303,000 728,000 $ 2,856,000 1,904,000 2,330,000 60% At 12-31-2026 100% $ 4,818,000 4,480,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs. Answer is not complete.
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,480,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date At 12-31-2024 At 12-31-2025 10% $ 367,000 3,303,000 728,000 $ 2,856,000 1,904,000 2,330,000 60% At 12-31-2026 100% $ 4,818,000 4,480,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs. Answer is not complete.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a
four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The
total contract price for construction of the building is $4,480,000. The building was completed on December 31, 2026. Estimated
percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to
Axelrod under the contract were as follows:
Percentage of completion
Costs incurred to date
Estimated costs to complete
Billings to Axelrod, to date
At 12-31-2024 At 12-31-2025
$367,000
3,303,000
728,000
$ 2,856,000
1,904,000
2,330,000
Ren 1 and 2
10%
Dan 3
60%
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required:
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the
contract does not qualify for revenue recognition over time.
2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be
recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the
balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs.
At 12-31-2026
$ 4,818,000
4,480,000
100%
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