The board of directors of Oriole Construction Company is meeting to choose between the cost-recovery method andthe percentage-of-completion method of accounting for long-term contracts in the company's financial statements.You have been engaged to assist Oriole's controller in the preparation of a presentation to be given at the boardmeeting. The controller provides you with the following information:1. Oriole commenced doing business on January 1, 2024.2. Construction activities for the year ended December 31, 2024, were as follows:3.4.(a)ProjectABсDETotalContractPrice$494,000714,000472,000187,000444,000$2,311,000* Your answer is incorrect.BillingsThrough12/31/24$334,000204,000469,000(1) The cost-recovery method.94,000394,000$1,495,000Cash CollectionsThrough12/31/24$304,000204,000384,00062,000394,000$1,348,000Contract CostsIncurredThrough12/31/24Each contract is with a different customer.Any work remaining to be done on the contracts is expected to be completed in 2025.$418,000186,000344,000117,000314,000$1,379,000$(2) The percentage-of-completion method (based on estimated costs). $EstimatedAdditional CoststoCompleteContract$95,000Compute the amount of income (or loss) before selling, general, and administrative expenses for the year endedDecember 31, 2024, which would be reported under:434,00091,00078,500$698,50098000-0-167400 The board of directors of Oriole Construction Company is meeting to choose between the cost-recovery method andthe percentage-of-completion method of accounting for long-term contracts in the company's financial statements.You have been engaged to assist Oriole's controller in the preparation of a presentation to be given at the boardmeeting. The controller provides you with the following information:1. Oriole commenced doing business on January 1, 2024.2. Construction activities for the year ended December 31, 2024, were as follows:3.4.(a)ProjectABсDETotalContractPrice$494,000714,000472,000187,000444,000$2,311,000* Your answer is incorrect.BillingsThrough12/31/24$334,000204,000469,000(1) The cost-recovery method.94,000394,000$1,495,000Cash CollectionsThrough12/31/24$304,000204,000384,00062,000394,000$1,348,000Contract CostsIncurredThrough12/31/24Each contract is with a different customer.Any work remaining to be done on the contracts is expected to be completed in 2025.$418,000186,000344,000117,000314,000$1,379,000$(2) The percentage-of-completion method (based on estimated costs). $EstimatedAdditional CoststoCompleteContract$95,000Compute the amount of income (or loss) before selling, general, and administrative expenses for the year endedDecember 31, 2024, which would be reported under:434,00091,00078,500$698,50098000-0-167400

Cost-Recovery method:Using this strategy, no profit is realized until all contract expenses have…

Project A BUDE C Total Contract Price $494,000 714,000 472,000 187,000 444,000 $2,311,000 Billings Through 12/31/24 $334,000 204,000 469,000 94,000 394,000 $1,495,000 Cash Collections Through 12/31/24 $304,000 204,000 384,000 62,000 394,000 $1,348,000 Contract Costs Incurred Through 12/31/24 $418,000 186,000 344,000 117,000 314,000 $1,379,000 Estimated Additional Costs to Complete Contract $95,000 434,000 -0- 91,000 78,500 $698,500

Project A BUDE C Total Contract Price $494,000 714,000 472,000 187,000 444,000 $2,311,000 Billings Through 12/31/24 $334,000 204,000 469,000 94,000 394,000 $1,495,000 Cash Collections Through 12/31/24 $304,000 204,000 384,000 62,000 394,000 $1,348,000 Contract Costs Incurred Through 12/31/24 $418,000 186,000 344,000 117,000 314,000 $1,379,000 Estimated Additional Costs to Complete Contract $95,000 434,000 -0- 91,000 78,500 $698,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Exercise 14-14 (Algo) Comparison of Projects Using Net Present Value [LO14-2] Labeau Products, Limited, of Perth, Australia, has $21,000 to invest in one of the following two projects: Project Y $ 21,000 Investment required Annual cash inflows Single cash inflow at the end of 6 years Life of the project The company's discount rate is 18%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project X. 2. Compute the net present value of Project Y. 3. Which project should the company accept? Project X Required 1 Required 2 Required 3 $ 21,000 $ 8,000 Complete this question by entering your answers in the tabs below. $ 50,000 6 years
P7
Year 0 2 Project A -$50,000 $24,200 $16,800 $46,500 Project B -$45,000 $39,000 $18,000 $18,000 Assume these projects are mutually exclusive and the cost of capital is 12.6%. Which of the following statements are true? A. The payback period of project A is 2.19 years. B. You'll accept project A since its NPV is about $872.85 greater than that of project B. C. You'll accept project B since its payback period is shorter than project A. D. Both (A) and (B) are true. E. Both (A) and (C) are true.
Exercise 14-7 (Algo) Net Present Value Analysis of Two Alternatives [LO14-2] Perit Industries has $115,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipment required $ 115,000 $ 0 Working capital investment required $ 0 $ 115,000 Annual cash inflows $ 21,000 $ 69,000 Salvage value of equipment in six years $ 8,700 $ 0 Life of the project 6 years 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 15%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your…
Dineshbhai
Please do not give solution in image format thanku
Bare Associates International 9990 Fairfax Blvd, Suite 100 Fairfax VA 22030 www.bareinternational.com Ms. Nicole Hartford BARE Invoice No.: 3073773 PSB Academy Pte Ltd Client Invoice No.: 15 Sioux Ln Suite 114 Gaithersburg MD, 20878 Purchase Order No.: Invoice Date: Oct 18, 2024 Payment Due: Oct 21, 2024 Please pay from this invoice and mention the BARE Invoice Number on your remittance. Date Completed Assignment ID Unit Fees Expenses *Credits Total Due Count: 0 Sub Total: Type Project/Description Fees *Credits Total Due Prepay Project cost - Initial (10%) + Project cost-fieldwork start (40%) of Mystery Shopping Services 2024 $ 6,477.75 $1,000.00 $ 6,477.75 Count: $ 1.00 Sub Total: $6,477.75 Invoice Sub Total: $ 6,477.75 Late Fees: $ - *Sum of Credits: $ - Total: $ 6,477.75 Payments $ - Total Due: $ 7,000.00
ment #5 Question 8, P7-23 (similar to) Part 1 of 7 HW Score: 40%, 4 of 10 points O Points: 0 of 1 Save K You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.4 million. Investment A will generate $2.16 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.44 million at the end of the first year, and its revenues will grow at 2.9% per year for every year after that. a. Which investment has the higher IRR? b. Which investment has the higher NPV when the cost of capital is 5.4%? c. In this case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best opportunity? a. Which investment has the higher IRR? The IRR of investment A is ☐ %. (Round to the nearest integer.)
A8
Exercise 12-11 (Algo) Preference Ranking of Investment Projects [LO12-5] Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project A B C D Investment Required $ 130,000 $ 136,000 $ 105,000 $ 169,000 Present value of Cash Inflows $ 249,323 $ 222,000 $ 180,035 $ 258, 136 Required 1 Required 2 Project Life of the Project (years) 7 The net present values should be computed using a 10% discount rate. The company wants your assistance in determining which project to accept first, second, and so forth. A B C 12 Required: 1. Compute the profitability index for each project. 2. In order of preference, rank the four projects in terms of net present value, profitability index, and internal rate of return. 7 3 Complete this question by entering your answers in the tabs below. Profitability Index Internal Rate of Return 20% 18% 19% 17% Compute the profitability index for each project.…
None