Inexperienced construction company Kevin Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,100,000. The work began in early 2023 and Kevin incurred costs of $945,000. At December 31, 2023, the estimated future costs to complete the project totalled $945,000. During 2024, Kevin ran into trouble with weather conditions and incurred the expected costs of $945,000 and estimated that it would need to spend an additional $310,000 to complete the project. During 2025, Kevin reluctantly completed the project, incurring further costs of $365,000. Prepare the December 31, 2024 year-end journal entry to record any loss from the contract, assuming Kevin uses the completed- contract method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date December 31, 2024 Account Titles and Explanation Debit Credit

Inexperienced construction company Kevin Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2,100,000. The work began in early 2023 and Kevin incurred costs of $945,000. At December 31, 2023, the estimated future costs to complete the project totalled $945,000. During 2024, Kevin ran into trouble with weather conditions and incurred the expected costs of $945,000 and estimated that it would need to spend an additional $310,000 to complete the project. During 2025, Kevin reluctantly completed the project, incurring further costs of $365,000. Prepare the December 31, 2024 year-end journal entry to record any loss from the contract, assuming Kevin uses the completed- contract method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date December 31, 2024 Account Titles and Explanation Debit Credit

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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XYZ Co. completed construction of a new silver mine in 2020. The cost of direct materials for the construction was $2,500,000 and direct labour was $2,300,000. In addition, the company allocated $280,000 of general overhead costs to the project. To finance the project, the company obtained a loan of $2,700,000 from its bank. The loan funds were drawn on February 24, 2020 and the mine was completed on November 24, 2020. The interest rate on the loan was 9% p.a. During construction, excess funds from the loan were invested and earned interest income of $24,000. The remainder of the funds needed for construction was drawn from internal cash reserves in the company. The company has also publicly made a commitment to clean up the site of the mine when the extraction operation is complete. It is estimated that the mining of this particular seam will be completed in 13 years, at which time restoration costs of $150,000 will be incurred. The appropriate discount rate for this type of…
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am. 255.
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On January 02, 2021, ACME Incorporated constructed a sea-salt extraction platform and processing plant on the Caribbean Sea for $500,000 cash. The contract runs for 10 years at which time ACME must dismantle the site. The decommissioning and removal costs are estimated at $250,000 and management has publicly announced that it will commit an additional $50,000 to sea-life preservation and study at that time. The company has a December 31 year end and none of the restoration obligation applies to production. An appropriate discount rate for this transaction is 8%. Required: Show your work below each entry and round interim calculations to four decimal places and final answers to the nearest dollar. Assuming that ACME follows ASPE, 1. Prepare all entries related to the site restoration only for 2021 (ignore depletion entries). 2. On January 03, 2023, the restoration obligation was revised and increased by $54,027 (present value of the increase). Prepare the required entry assuming that…