Required information [The following information applies to the questions displayed below] In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Balance Sheet (Partial) Current assets Cash 2021 2022 $2,640,000 $2,300,000 6,160,000 2,660,000 2,080,000 2,860,000 1,840,000 2,800,000 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round intermediate calculations.) Current liabilities: 2021 0 2023 $2,926,000 2022 5,060,000 5,360,000 0
Required information [The following information applies to the questions displayed below] In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Balance Sheet (Partial) Current assets Cash 2021 2022 $2,640,000 $2,300,000 6,160,000 2,660,000 2,080,000 2,860,000 1,840,000 2,800,000 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round intermediate calculations.) Current liabilities: 2021 0 2023 $2,926,000 2022 5,060,000 5,360,000 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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answer in text form please (without image)
![Required information
[The following information applies to the questions displayed below.]
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara
County for $10,000,000. The road was completed in 2023. Information related to the contract is as
follows:
Cost incurred during the year
Estimated costs to complete as of year-end
Billings during the year
Cash collections during the year
Westgate recognizes revenue over time according to percentage of completion.
Balance Sheet (Partial)
Current assets:
Cash
Current liabilities
3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related
to the contract. (Do not round intermediate calculations.)
Coats incurred during the year
Estimated costs to complete as of year-end
Revenue
Gross profit (loss)
2021
Revenue
Gross profit (loss)
Costs incurred during the year
Estimated costs to complete as of year-end
$
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following
costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to
the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
2022
2021
2022
2021
$2,640,000 $2,300,000
6,160,000 2,660,000
2,080,000 2,860,000
1,840,000 2,800,000
360,000
2021
2022
0
2022
2023
2023
$2,926,000
5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following
costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to
the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
5,060,000
5,360,000
2022
2021
2023
$2,640,000 $3,840,000 $3,240,000
6,160,000 3,140,000
2022
2021
$2,640,000 $3,840,000
6,160,000 4,180,000
2023
0
0
0
2023
$4,020,000
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9855cb7a-5db1-4294-9de9-4e629d51bb96%2F686c92fd-4ed5-4751-a157-fe7b42715c08%2F69gp8tm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara
County for $10,000,000. The road was completed in 2023. Information related to the contract is as
follows:
Cost incurred during the year
Estimated costs to complete as of year-end
Billings during the year
Cash collections during the year
Westgate recognizes revenue over time according to percentage of completion.
Balance Sheet (Partial)
Current assets:
Cash
Current liabilities
3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related
to the contract. (Do not round intermediate calculations.)
Coats incurred during the year
Estimated costs to complete as of year-end
Revenue
Gross profit (loss)
2021
Revenue
Gross profit (loss)
Costs incurred during the year
Estimated costs to complete as of year-end
$
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following
costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to
the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
2022
2021
2022
2021
$2,640,000 $2,300,000
6,160,000 2,660,000
2,080,000 2,860,000
1,840,000 2,800,000
360,000
2021
2022
0
2022
2023
2023
$2,926,000
5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following
costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to
the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
5,060,000
5,360,000
2022
2021
2023
$2,640,000 $3,840,000 $3,240,000
6,160,000 3,140,000
2022
2021
$2,640,000 $3,840,000
6,160,000 4,180,000
2023
0
0
0
2023
$4,020,000
0
Expert Solution
Step 1: Brief Explanation about the concept used
Percentage Method of Completion in Construction Contract
A long-term project or contract's revenue realization strategy is assessed using the percentage of completion technique, a revenue recognition accounting concept. Every period, based on the amount of work accomplished or costs spent, revenue, expenses, and gross profit are recognized. According to IFRS 15, income from performance obligations that are recognized over time should be based on the percentage of completion. The percentage of completion method is in compliance with this standard. Revenues and expenses are recorded according to how much of the contracted project has been completed. Commonly, it is calculated using the cost-to-cost approach.
Please note that as per guidelines provided only part 3 has been answered
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