Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9] Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,750,000. The project began in 2021 and was completed in 2022. 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 2021 2022 $360,000 $2,155,000 1,440,000 500,000 445,000 0 1,770,000 1,825,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 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 2021 assuming Nortel 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 2021 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 Nortel Networks contracted to provide a customer with Internet infrastructure for $2,750,000. The project began in 2021 and was completed in 2022. 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 2021 2022 $360,000 $2,155,000 1,440,000 500,000 445,000 0 1,770,000 1,825,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 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 2021 assuming Nortel 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 2021 assuming this project does not qualify for revenue recognition over time.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject:
![Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9]
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,750,000. The project began in 2021 and
was completed in 2022. 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
2021
2022
$ 360,000 $2,155,000
1,440,000
500,000
445,000
0
Complete this question by entering your answers in the tabs below.
1,770,000
1,825,000
Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue
over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 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 2021
assuming Nortel 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 2021
assuming this project does not qualify for revenue recognition over time.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7fe5a73-45e4-4166-8ba1-50e355550dfc%2F450f9e47-b3c8-4bcd-baa0-701b1e8a4c6d%2Fv73vmot_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 Nortel Networks contracted to provide a customer with Internet infrastructure for $2,750,000. The project began in 2021 and
was completed in 2022. 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
2021
2022
$ 360,000 $2,155,000
1,440,000
500,000
445,000
0
Complete this question by entering your answers in the tabs below.
1,770,000
1,825,000
Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue
over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 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 2021
assuming Nortel 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 2021
assuming this project does not qualify for revenue recognition over time.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education