**Construction Contract Cost Analysis***Scenario Overview:*Bass Co. utilizes the cost-to-cost method to evaluate progress on a construction contract with a customer. The contract was completed in the year 20x3. Details of the contract are provided below:| | 20x1 | 20x2 | 20x3 ||----------------|-----------|-----------|-----------|| Transaction price | 20,000,000 | 20,000,000 | 20,000,000 || Profit each year | 400,000 | 1,400,000 | (200,000) || Costs incurred each year | 3,600,000 | ? | 8,200,000 |**Questions:**10. **How much are the contract costs incurred in 20x2?** a. 5,800,000 b. 6,200,000 c. 6,600,000 d. 10,200,000 11. **How much are the estimated additional costs to complete as of December 31, 20x2?** a. 5,400,000 b. 6,800,000 c. 7,200,000 d. 8,600,000

Cost-to-cost method :The cost-to-cost method is a way to recognize revenue and profit in long-term…

M. 00 00 at of. Use the following information for the next two questions: Co. appropriately on a uses the cost-to-cost method in measuring construction contract with a customer. Information on this contract, which was completed in 20x3, is shown below: Bass its progress Transaction price Profit each year Costs incurred each year (AICPA-Adapted) 20x1 20,000,000 400,000 3,600,000 20x2 20,000,000 1,400,000 ? 10. How much are the contract costs incurred in 20x2? a. 5,800,000 c. 6,600,000 b. 6,200,000 d. 10,200,000 a. 5,400,000 b. 6,800,000 20x3 20,000,000 (200,000) 8,200,000 How much are the estimated additional costs to complete as of December 31, 20x2? c. 7,200,000 Vies d. 8,600,000

M. 00 00 at of. Use the following information for the next two questions: Co. appropriately on a uses the cost-to-cost method in measuring construction contract with a customer. Information on this contract, which was completed in 20x3, is shown below: Bass its progress Transaction price Profit each year Costs incurred each year (AICPA-Adapted) 20x1 20,000,000 400,000 3,600,000 20x2 20,000,000 1,400,000 ? 10. How much are the contract costs incurred in 20x2? a. 5,800,000 c. 6,600,000 b. 6,200,000 d. 10,200,000 a. 5,400,000 b. 6,800,000 20x3 20,000,000 (200,000) 8,200,000 How much are the estimated additional costs to complete as of December 31, 20x2? c. 7,200,000 Vies d. 8,600,000

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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