In Spring 2017, Bava Construction signed a contract with the city of Springfield, to construct a new city hall for $200 million. Bava expects to construct the building within two years and incur expenses of $150 million, which means the company earns a $50 million profit on the contract. Bava incurred $60 million in costs during 2017 and $90 million in 2018 to complete the contract on time. Using the cost-to-cost method, fill in the table below indicating how much revenue and profit Bava will recognize in both 2017 and 2018. Year 2017 2018 Contract Sales $200 million Percent completed Revenue Recognized $90 million Costs incurred (expenses) $60 million Profit Recognized
In Spring 2017, Bava Construction signed a contract with the city of Springfield, to construct a new city hall for $200 million. Bava expects to construct the building within two years and incur expenses of $150 million, which means the company earns a $50 million profit on the contract. Bava incurred $60 million in costs during 2017 and $90 million in 2018 to complete the contract on time. Using the cost-to-cost method, fill in the table below indicating how much revenue and profit Bava will recognize in both 2017 and 2018. Year 2017 2018 Contract Sales $200 million Percent completed Revenue Recognized $90 million Costs incurred (expenses) $60 million Profit Recognized
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In Spring 2017, Bava Construction signed a contract with the city of Springfield, to construct a new city hall for $200
million. Bava expects to construct the building within two years and incur expenses of $150 million, which means the
company earns a $50 million profit on the contract. Bava incurred $60 million in costs during 2017 and $90 million in 2018
to complete the contract on time.
Using the cost-to-cost method, fill in the table below indicating how much revenue and profit Bava will recognize in both
2017 and 2018.
Year
2017
2018
Contract
Sales
$200 million
Percent
completed
Revenue
Recognized
$90 million
Costs incurred
(expenses)
$60 million
Profit
Recognized
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