On April 1, 2023, Carla Vista Inc. entered into a cost plus fixed fee non-cancellable contract to construct an electric generator for Pharoah Corporation. At the contract date, Carla Vista estimated that it would take two years to complete the project at a cost of $2,280,000. The fixed fee stipulated in the contract was $513,000. Carla Vista appropriately accounts for this contract under the percentage-of-completion method. During 2023, Carla Vista incurred costs of $912,000 related to this project. The estimated cost at December 31, 2023, to complete the contract is $1,368,000. Pharoah was billed $684,000 under the contract. The billings are non- refundable. (a) Prepare a schedule to calculate the amount of gross profit to be recognized by Carla Vista under the contract for the year ended December 31, 2023.
On April 1, 2023, Carla Vista Inc. entered into a cost plus fixed fee non-cancellable contract to construct an electric generator for Pharoah Corporation. At the contract date, Carla Vista estimated that it would take two years to complete the project at a cost of $2,280,000. The fixed fee stipulated in the contract was $513,000. Carla Vista appropriately accounts for this contract under the percentage-of-completion method. During 2023, Carla Vista incurred costs of $912,000 related to this project. The estimated cost at December 31, 2023, to complete the contract is $1,368,000. Pharoah was billed $684,000 under the contract. The billings are non- refundable. (a) Prepare a schedule to calculate the amount of gross profit to be recognized by Carla Vista under the contract for the year ended December 31, 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:On April 1, 2023, Carla Vista Inc. entered into a cost plus fixed fee non-cancellable contract to construct an electric generator for
Pharoah Corporation. At the contract date, Carla Vista estimated that it would take two years to complete the project at a cost of
$2.280,000. The fixed fee stipulated in the contract was $513,000. Carla Vista appropriately accounts for this contract under the
percentage-of-completion method. During 2023, Carla Vista incurred costs of $912,000 related to this project. The estimated cost at
December 31, 2023, to complete the contract is $1,368,000. Pharoah was billed $684,000 under the contract. The billings are non-
refundable.
A
(a)
Prepare a schedule to calculate the amount of gross profit to be recognized by Carla Vista under the contract for the year ended
December 31, 2023.
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