Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,200,000. In the first year of the contract Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete the project are $5,000,000. Tullis billed $4,000,000 in year 1 and collected $3,200,000 by the end of the end of the year. How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the completed-contract method?
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Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,200,000. In the first year of the contract Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete the project are $5,000,000. Tullis billed $4,000,000 in year 1 and collected $3,200,000 by the end of the end of the year. How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the
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- Gilroy Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,140. The freight and installation costs for the equipment are $660. If purchased, annual repairs and maintenance are estimated to be $410 per year over the four-year useful life of the equipment. Alternatively, Gilroy can lease the equipment from a domestic supplier for $1,540 per year for four years, with no additional costs. Prepare a differential analysis dated December 11 to determine whether Gilroy should lease (Alternative 1) or purchase (Alternative 2) the equipment. (Hint: This is a lease-or-buy decision, which must be analyzed from the perspective of the equipment user, as opposed to the equipment owner.) If an amount is zero, enter "0". Differential Analysis Lease Machine (Alt. 1) or Buy Machine (Alt. 2) December 11 Lease Machine(Alternative 1) Buy Machine(Alternative 2) Differential Effecton Income(Alternative 2) Revenues $0 $0 $0 Costs:…On January 1, 2018 The Village of Port Jefferson engaged to Frog Construction company to construct amunicipal office complex. The three-year a to receive 10 million in cash payments from the city in threeinstallments: 25% when the project was 30% complete; 25% when the project was 60% complete; and50%when the project was fully complete. The contract required that Frog's completion estimates be certifiedby an independent consultant before payments were made.During the first year of the contract, Frog completed 30% of the contract and incurred costs of 2,490,000.During the second year, the project was certified as being 60% complete and Frog incurred costs of3,100,000.During the third year, Frog completed the project and incurred costs of 3,110,000.Assuming Frog had no other revenues or expenses, determine the profit on construction for 2018, 2019,and 2020 under the following methods: A. Percentage Calculation B. Completed ContractOriole Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $2050000 each quarter. The total contract price is $18222000 and Oriole estimates total costs of $17100000. Oriole estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2021, Oriole estimates that it is 20% complete with the construction, based on costs incurred.At December 31, 2022, Oriole Construction estimates that it is 70% complete with the building; however, the estimate of total costs to be incurred has risen to $17300000 due to unanticipated price increases. What is the total amount of Construction Expenses that Oriole will recognize for the year ended December 31, 2022? $8690000 $8325600 $12110000 $8465600
- 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…ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $823,400.00 work cell. Further, it will cost the firm $55,600.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $68,600.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $7,100.00. Finally, the firm will invest $11,400.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $905,000.00 with expenses estimated at 37.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 38.00%. The work cell is estimated to have a market value of $493,000.00 at the end of the fourth year. The firm expects to reclaim 86.00% of the…The Titanic Shipbuilding Company has a noncancelable contract to build a small cargo vessel. Construction involves a cash outlay of $265,000 at the end of each of the next two years. At the end of the third year, the company will receive payment of $625,000. The company can speed up construction by working an extra shift. In this case, there will be a cash outlay of $575,000 at the end of the first year followed by a cash payment of $625,000 at the end of the second year. Use the IRR rule to show the (approximate) range of opportunity costs of capital at which the company should work the extra shift. Note: Enter your answers as a percent rounded to 2 decimal places. Enter the smallest percent first. > Answer is complete but not entirely correct. % 23.48 X and The company should work the extra shift if the cost of capital is between 68.86 X %.
- Oscar’s Environmental Services Inc. has a three-year contract to remove and recycle waste weekly from Ernie’s Ducky Factory Co. The contract requires payment at the beginning of each year. In the first year of the contract, Oscar's Environmental will incur approximately 80% of the cost of servicing Ernie's Ducky factory because it must construct a new recycling line to handle the waste from rubber ducky production. Ernie’s Ducky Factory Co. receives and consumes the benefits of each weekly garbage removal as each one is performed. Ernie's does not benefit from the recycling of its waste materials. When should Oscar’s Environmental recognize revenue? A. Oscar’s Hauling Inc. should recognize revenue over time because Ernie’s Ducky Factory Co. receives the benefits of each garbage removal service when it is performed. B. Oscar’s Environmental should use the cost-plus-margin method to determine how much revenue to recognize. C. Oscar’s Environmental should recognize revenue at a single…Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,600,000. In the first year of the contract Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete the project are $5,000,000. Tullis billed $5,000,000 in year 1 and collected $3,100,000 by the end of the end of the year. How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the completed - contract method? O A. asset of $2,000,000 O B. liability of $1,900,000 O C. asset of $1,900,000 O D. liability of $2,000,000On 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…
- Omni-Resistor, Incorporated specializes in waterproofing homes, office buildings and other structures. Recently it completed a waterproofing renovation for a building at a local university. The contract specifies that Omni-Resistor will receive a flat lump sum of $101,000 for the renovation, and an additional $2,600 if there is no water leaking through the roof within the first year after the renovation. The seller estimates that there is an 80% chance that no leakage will occur within the first year. Required: (a) Assuming Omni-Resistor uses the most likely value to estimate the variable consideration, calculate the transaction price. (b) Assuming Omni-Resistor determines transaction price as the “expected value” of the variable consideration, calculate the transaction price. (c) Assume Omni-Resistor uses the “expected value” approach, but is very uncertain of that estimate due to a lack of experience with similar renovations. Calculate the transaction price.Direct Energy has two options for upgrading a natural gas power station to meet new government standards.Option 1: Direct Energy will make the upgrades themselves. This is expected to cost $12,000 at the end of every three months for 14 years. At the end of the operation (in 14 years) Direct Energy expects to sell all equipment needed for the upgrade for $105,000.Option 2: Pay experienced contractors. This will cost $39,000 up front and $14,200 quarterly for 10 years.Assume all interest is 2.33% compounded quarterly. Round the answers to NPV (Option 1), and NPV (Option 2) to the nearest dollar. Round all other answers to two decimal places where applicable. 1) Find the net present value of option 1: Payments (Cost) Sale of equipment (Residual) P/Y = C/Y = N = I/Y = % % PV = $ $ PMT = $ $ FV = $ $ (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.) NPV (Option 1) = $2) Find the net present value of option 2:…Carr Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,900. The freight and installation costs for the equipment are $515. If purchased, annual repairs and maintenance are estimated to be $410 per year over the four-year useful life of the equipment. Alternatively, Carr can lease the equipment from a domestic supplier for $1,750 per year for four years, with no additional costs. Required: A. Prepare a differential analysis dated August 4 to determine whether Carr should lease (Alternative 1) or purchase (Alternative 2) the equipment. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. (Hint: This is a “lease or buy” decision, which must be analyzed from the…
