Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9] Assume Avaya contracted to provide a customer with Internet Infrastructure for $2,650,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year Required: 2024 2025 $ 352,000 $2,025,000 1,408,000 0 470,000 1,750,000 405,000 1,815,000 1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the Information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the Information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time.
Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9] Assume Avaya contracted to provide a customer with Internet Infrastructure for $2,650,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year Required: 2024 2025 $ 352,000 $2,025,000 1,408,000 0 470,000 1,750,000 405,000 1,815,000 1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the Information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the Information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dinesh Bhai
![Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9]
Assume Avaya contracted to provide a customer with Internet Infrastructure for $2,650,000. The project began in 2024 and was
completed in 2025. Data relating to the contract are summarized below:
Costs incurred during the year
Estimated costs to complete as of 12/31
Billings during the year
Cash collections during the year
Required:
2024
2025
$ 352,000 $2,025,000
1,408,000
0
470,000 1,750,000
405,000 1,815,000
1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes
revenue over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not
qualify for revenue recognition over time.
3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024,
assuming Avaya recognizes revenue over time according to percentage of completion.
4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024,
assuming this project does not qualify for revenue recognition over time.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6a54fed1-b270-461b-babe-e50779138ae7%2F442fc0a3-2516-4835-9617-e21ca4317bdd%2F480newo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9]
Assume Avaya contracted to provide a customer with Internet Infrastructure for $2,650,000. The project began in 2024 and was
completed in 2025. Data relating to the contract are summarized below:
Costs incurred during the year
Estimated costs to complete as of 12/31
Billings during the year
Cash collections during the year
Required:
2024
2025
$ 352,000 $2,025,000
1,408,000
0
470,000 1,750,000
405,000 1,815,000
1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes
revenue over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not
qualify for revenue recognition over time.
3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024,
assuming Avaya recognizes revenue over time according to percentage of completion.
4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024,
assuming this project does not qualify for revenue recognition over time.
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