bvh On April 1, 2025, Cullumber Inc. entered into a cost plus fixed fee contract to construct an electric generator for Oriole Corporation.At the contract date, Cullumber estimated that it would take 2 years to complete the project at a cost of $1,850,000. The fixed feestipulated in the contract is $429,000. Cullumber appropriately accounts for this contract under the percentage-of-completionmethod. During 2025, Cullumber incurred costs of $758,500 related to the project. The estimated cost at December 31, 2025, tocomplete the contract is $1,091,500. Oriole was billed $655,000 under the contract.Prepare a schedule to compute the amount of gross profit to be recognized by Cullumber under the contract for the year endedDecember 31, 2025. (If an amount reduces the account balance then enter with negative sign, eg. -45 or parentheses e.g. (45).)CULLUMBER INC.Computation of Gross Profit to beRecognized on Uncompleted Contract$%

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Answered: On April 1, 2025, Cullumber Inc.…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6P

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On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
On April 1, 2025, Sandhill Inc. entered into a cost plus fixed fee contract to construct an electric generator for Sweet Acacia Corporation. At the contract date, Sandhill estimated that it would take 2 years to complete the project at a cost of $2,060,000. The fixed fee stipulated in the contract is $468,000. Sandhill appropriately accounts for this contract under the percentage-of-completion method. During 2025, Sandhill incurred costs of $762,200 related to the project. The estimated cost at December 31, 2025, to complete the contract is $1,297,800. Sweet Acacia was billed $584,000 under the contract. Prepare a schedule to compute the amount of gross profit to be recognized by Sandhill under the contract for the year ended December 31, 2025. (If an amount reduces the account balance then enter with negative sign., e.g. -45 or parentheses e.g. (45).) SANDHILL INC. Computation of Gross Profit to be Recognized on Uncompleted Contract Year Ended December 31, 2025 Total Contract Price…
On April 1, 2020, Waleed company entered into a cost-plus fixed-fee contract to construct a power station, estimated to complete in 2 years at a cost of $6,000,000. The fixed fee stipulated in the contract is $900,000. During the year Waleed company incurred cost of $1,600,000. The estimated cost at December 31, 2020 to complete the contract is $2,400,000 and billed for $1,200,000. Prepare a schedule to compute amount of gross profit to be recognized under the percentage of completion method
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,060,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-31-2024 10% $ 360,000 3,240,000 721,000 At 12-31-2025 $ 2,562,000 1,708,000 2,190,000 At 12-31-2026 60% 100% $ 4,321,000 0 4,060,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for…
Curtiss Construction Company, Incorporated, entered into a fixed price contract with Axelrod Associates on July 1, 2024, to construct a four story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,240,000 The building was completed on December 31, 2026 Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows Percentage of completion Cests incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-11-2024 10% At 12-31-2025 $2,688,000 1,792,000 AT 12-11-2026 60% 100% $ 4,534,000 4,240,000 $363,000 3,267,000 724,000 2,250,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue…
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Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,720,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2024 At 12-31-2025 At 12-31-2026 Percentage of completion 10% 60% 100% Costs incurred to date $ 371,000 $ 3,024,000 $ 5,102,000 Estimated costs to complete 3,339,000 2,016,000 0 Billings to Axelrod, to date 732,000 2,410,000 4,720,000 Required: Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not…
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,480,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date At 12-31-2024 At 12-31-2025 $367,000 3,303,000 728,000 $ 2,856,000 1,904,000 2,330,000 Ren 1 and 2 10% Dan 3 60% Answer is not complete. Complete this question by entering your answers in the tabs below. Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three…
Saved Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,720,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-31-2024 At 12-31-2025 At 12-31-2026 10% 60% 100% $ 371,000 3,339,000 732,000 $ 3,024,000 2,016,000 2,410,000 $ 5,102,000. 0 4,720,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify…
Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,000,000. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date Req 1 and 2 Complete this question by entering your answers in the tabs below. Req 3 At 12-31-2021 At 12-31-2022 10% $ 350,000 3,150,000 720,000 $2,500,000 1,700,000 2,170,000 Year 2021 2022 2023 Total project profit (loss) Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of…
On July 1, 2020, Oriole Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,880,000. On July 1, Oriole estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. At12/31/20 At12/31/21 At12/31/22 Contract costs incurred to date $288,800 $1,227,600 $2,078,500 Estimated costs to complete the contract 1,231,200 752,400 –0– Billings to Gumbel 290,000 1,090,000 1,820,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank.…
Brainy Company started the construction of a building for a customer at a fixed contract price of P2,000,000 on January 1, 2019. On the same date, the customer paid a mobilization fee equal to 5% of contract price that will be deductible from the first billing. The outcome of construction contract can be estimated reliably except in 2019 which is the start of the project. The company billed the customer equivalent to 30%, 20% and 40% of the contract price during 2019, 2020 and 2021, respectively. The remaining billing was made at the year of completion of the project. The company made collection from the customer at the end of 2019, 2020 and 2021, in the amount of P240,000, P900,000 and P360,000, respectively. Direct costs related to the said project (see image below).1. What is the Percentage of completion in 2020? 2. How much is the Construction Revenue to be recognized in 2020? 3. How much is the Gross Income (Loss) to be recognized in 2021? 4. How much is the balance of Account…

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