Question 22 of 30.Ava Limited., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.8 million beginning September 1, 2015, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2017. The following data pertain to the construction period. 201520162017Costs to date$867,000 $1,804,800 $2,346,000Estimated costs to complete1,683,000 1,015,200 0Progress billings to date (non-refundable)921,000 2,296,000 2,800,000 Cash collected to date767,000 2,177,000 2,800,000 a) Calculate the amount of revenue to be recognized in 2015 and 2016.

The accounting idea of matching revenues and costs is in line with the percentage of completion…

Answered: Question 22 of 30. Ava Limited., which…

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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Question 22 of 30.

Ava Limited., which has a calendar year end, has entered into a non-cancellable fixed-price contract for $2.8 million beginning September 1, 2015, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2017. The following data pertain to the construction period.

	2015	2016	2017
Costs to date	$867,000	$1,804,800	$2,346,000
Estimated costs to complete	1,683,000	1,015,200	0
Progress billings to date (non-refundable)	921,000	2,296,000	2,800,000
Cash collected to date	767,000	2,177,000	2,800,000

a) Calculate the amount of revenue to be recognized in 2015 and 2016.

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