Question 3 Penny's Construction has been contracted to build a small indoor skate park. The contract was signed in November and construction began in December. The total price for the contract is $12 million. The job was complete December 20X3. Penny has a December 31 year end. 20X1 20X2 20X3 $ 5,600,000 7,000,000 5,200,000 3,000,000 $ 12,500,000 $ 1,400,000 7,600,000 1,000,000 800,000 Accumulated costs to date Estimated costs to complete project Customer billings to date 12,000,000 10,500,000 Cash collected to date Required: a) Calculate the amount of gross profit to be recognized each year using the percentage-of- completion method. b) Show how the details of this contract would be disclosed on the Statement of Financial Position and Statement of Financial Performance in 20X2.
Question 3 Penny's Construction has been contracted to build a small indoor skate park. The contract was signed in November and construction began in December. The total price for the contract is $12 million. The job was complete December 20X3. Penny has a December 31 year end. 20X1 20X2 20X3 $ 5,600,000 7,000,000 5,200,000 3,000,000 $ 12,500,000 $ 1,400,000 7,600,000 1,000,000 800,000 Accumulated costs to date Estimated costs to complete project Customer billings to date 12,000,000 10,500,000 Cash collected to date Required: a) Calculate the amount of gross profit to be recognized each year using the percentage-of- completion method. b) Show how the details of this contract would be disclosed on the Statement of Financial Position and Statement of Financial Performance in 20X2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text:Question 3
Penny's Construction has been contracted to build a small indoor skate park. The contract was signed in
November and construction began in December. The total price for the contract is $12 million. The job
was complete December 203. Penny has a December 31 year end.
20X1
20X2
20X3
$ 1,400,000
7,600,000
1,000,000
800,000
$ 5,600,000
7,000,000
5,200,000
3,000,000
Accumulated costs to date
$ 12,500,000
Estimated costs to complete project
Customer billings to date
12,000,000
10,500,000
Cash collected to date
Required:
a) Calculate the amount of gross profit to be recognized each year using the percentage-of-
completion method.
b) Show how the details of this contract would be disclosed on the Statement of Financial Position
and Statement of Financial Performance in 20X2.
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