E18-18 (Long-Term Contract Reporting) Berstler Construction Company began operations in 2012. Con- struction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2012, is expected to be completed in 2013. Project 123 Total Contract Price $ 560,000 670,000 520,000 $1,750,000 Billings through 12/31/12 $360,000 220,000 500,000 $1,080,000 Cash Collections through 12/31/12 $340,000 210,000 440,000 $990,000 Contract Costs Incurred through 12/31/12 $450,000 126,000 330,000 $906,000 Estimated Additional Costs to Complete $130,000 504,000 -0- $634,000 Instructions Prepare a partial income statement and balance sheet to indicate how the above information would be

E18-18 (Long-Term Contract Reporting) Berstler Construction Company began operations in 2012. Con- struction activity for the first year is shown below. All contracts are with different customers, and any work remaining at December 31, 2012, is expected to be completed in 2013. Project 123 Total Contract Price $ 560,000 670,000 520,000 $1,750,000 Billings through 12/31/12 $360,000 220,000 500,000 $1,080,000 Cash Collections through 12/31/12 $340,000 210,000 440,000 $990,000 Contract Costs Incurred through 12/31/12 $450,000 126,000 330,000 $906,000 Estimated Additional Costs to Complete $130,000 504,000 -0- $634,000 Instructions Prepare a partial income statement and balance sheet to indicate how the above information would be

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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*E17.33 (LO 5, 6) (Recognition of Profit on Long-Term Contracts) During 2025, Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2027. The following information is available. Costs incurred to date Estimated costs to complete Billings to date Collections to date 2025 $400,000 600,000 300,000 270,000 2026 $825,000 275,000 900,000 810,000 2027 $1,070,000 -0- 1,600,000 1,425,000 Instructions a. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. b. Prepare all necessary journal entries for 2026. c. Compute the amount of gross profit to be recognized each year, assuming the cost-recovery method is used.
During 2020, Grouper Company started a construction job with a contract price of $1,590,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $370,000 $869,790 $1,080,000 Estimated costs to complete 630,000 231,210 –0– Billings to date 302,000 900,000 1,590,000 Collections to date 267,000 804,000 1,415,000 (a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount Gross profit recognized in 2021 $enter a dollar amount Gross profit recognized in 2022 $enter a dollar amount
14. What is the Construction in Progress, net of Progress Billings at December 31, 2021, using zero profit method? 250,000 liability 250,000 asset 240,000 asset 240,000 liability Any other amount
s
Explain clearly
5
Answer is $1,800,000. Please explain the reasoning and calculations
3. The following details apply to a contract where performance obligations are satisfied over time at 31 December 2015. Total contract revenue Costs to date Estimated costs to 40,000 completion Amounts invoiced 70,000 Amount paid up to 45,000 31.12.2015 The contract is agreed to be 40% complete at 31 December 2015. 100,000 50,000 Required: Show how a contract would be reflected in the statement of financial position and in the statement of profit or loss at 31 December 2015 under IERS 15 Revenue from contracts with customers.
Question 22 of 30.Ava Limited., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.8 million beginning September 1, 2015, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2017. The following data pertain to the construction period. 2015 2016 2017 Costs to date $867,000 $1,804,800 $2,346,000 Estimated costs to complete 1,683,000 1,015,200 0 Progress billings to date (non-refundable) 921,000 2,296,000 2,800,000 Cash collected to date 767,000 2,177,000 2,800,000 a) Calculate the amount of revenue to be recognized in 2015 and 2016.
M5-13. Computing Revenues under Long-Term Contracts Camden Corporation agreed to build a warehouse for a client at an agreed contract price of $900,000. Ex- pected (and actual) costs for the warehouse follow: 2016, $202,500; 2017, $337,500; and 2018, $135,000. The company completed the warehouse in 2018. Compute revenues, expenses, and income for each year 2016 through 2018, and for all three years combined, using the cost-to-cost method.
1. During 2020, Bay Construction started a new construction job with a contract price of $750 million. Bay has a 12/31 fiscal year end. Bay has determined that the contract does not qualify for revenue recognition over time. The contract was completed on 12/31/22 with the following information ($ in millions): Costs incurred in the period (paid in cash) Estimated costs to complete at 12/31 Billings on contract in the period Cash collected in the period 2020 180.0 2021 2022 432.0 150.0 540.0 153.0 -0- 150 350 250 200 400 150 What is the amount of gross profit (loss) on the contract that Bay would recognize on the Income Statement in 2020, 2021 and 2022? You must show supporting work (calculations/explanations) to receive credit for your answers. Gross Profit (Loss) 2020 2021 2022