Wilco Inc. uses the percentage of completion method to recognize revenues. In 2022. Wilco enters into a $21 million construction contract with Seminole Corporation. Wilco expects construction will take 4 years to complete. On December 31, 2022, Wilco reports the following regarding the Seminole construction project: $2,000,000 $3,000,000 $1,750,000 Est. Remaining Costs $15,000,000 Est. Remaining Time 36 months (3 years) How much revenue should Wilco recognize on December 31, 2022? Progress Billings Costs Incurred Collections Ⓒ $2,000,000 O $20,000,000 O $3,500,000 O Some other answer O $5,000,000

Wilco Inc. uses the percentage of completion method to recognize revenues. In 2022. Wilco enters into a $21 million construction contract with Seminole Corporation. Wilco expects construction will take 4 years to complete. On December 31, 2022, Wilco reports the following regarding the Seminole construction project: $2,000,000 $3,000,000 $1,750,000 Est. Remaining Costs $15,000,000 Est. Remaining Time 36 months (3 years) How much revenue should Wilco recognize on December 31, 2022? Progress Billings Costs Incurred Collections Ⓒ $2,000,000 O $20,000,000 O $3,500,000 O Some other answer O $5,000,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
ABC Construction Company began work on a contract in 2022 and completed the contract in 2023. The total contact price was P8,500,000. Information related to the construction project are as follows: 2022 2023 Costs incurred during the year P1,200,000 P6,250,000 Estimated costs to complete 4,800,000 - Progress billings during the year 1,450,000 7,050,000 Collections during the year 800,000 6,000,000 How much is the gross profit to be recognized in 2023?
Swifty Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $598,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $894,000. The following data pertain to the construction period. 2020 2021 2022 Costs to date $263,120 $412,620 $607,000 Estimated costs to complete 334,880 185,380 –0– Progress billings to date 272,000 545,000 894,000 Cash collected to date 242,000 495,000 894,000 (a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter 0. Do not leave any fields blank.) Gross profit recognized in 2020 $ Gross profit recognized in 2021 $ Gross profit recognized in 2022 $ (b) Using the completed-contract method, compute the estimated…
Shanahan Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $609,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $896,000. The following data pertain to the construction period. 2020 2021 2022 Costs to date $266,640 $412,080 $617,000 Estimated costs to complete 339,360 193,9200 –0– Progress billings to date 270,000 545,000 896,000 Cash collected to date 240,000 495,000 896,000 A/ Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. Gross profit recognized in 2020: Gross profit recognized in 2021: Gross profit recognized in 2022: B/ Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period. Gross profit recognized in 2020: Gross profit recognized in 2021: Gross…
On January 1, 2022, Winter Harvest Ltd. started a construction project for $4,500,000. Relevant data for 2022 and 2023 are as follows: 2022 2023 Current year construction costs $ 3,300,000 $ 620, 000 Estimated remaining costs to complete 600,000 - 0- Current year billings 3, 100, 000 1,400,000 Current year collections 3,000,000 1,500, 000 Required 1. Calculate the following amounts for each method: 2. Completed Contract Percentage of Completion 2022 2023 2022 2023 Gross Profit $ ? $ ? $ ? $ ? Construction in progress year - end balance. $ ? $ ? $ ? $ ? Costs in excess of billi\table[[, \table[[Completed], [Contract]], \table[[Percentage of], [Completion]]], [, 2022, 2023, 2022, 2023], [Gross Profit,$?, $?, $ ?, $?ngs (Billings in excess of costs) $ ? $ ? $ ? $ ?
On January 1, 2023, Falcon Construction Ltd. starts a construction project for $4,500,000. Relevant data for 2023 and 2024 are as follows: 2023 2024 Current year construction costs $3,300,000 $ 620,000 Estimated remaining costs to complete 600,000 -0- Current year billings 3,100,000 1,400,000 Current year collections 3,000,000 1,500,000 Instructions Prepare the appropriate journal entries for both years using (a) the percentage-of-completion method, (b) the completed-contract method, and (c) the zero-profit method.
Paul Constructions has entered into a contract beginning January 1, 2020, to build a pool. It has been estimated that the pool will cost P300,000, and will take three years to construct. The pool will be billed to the purchasing at P450,000. The following data pertain to the construction period. 2020 135,000 165,000 2021 210,000 90,000 2022 0 Cost to date: Estimated cost to complete. Progress billing to date. Cash collected to date 135.000 120.000 275.000 250,000 450,000 450.000 During 2020, Costs incurred include P15,000 standard materials stored at the site to be used in 2022 to complete the project. Using the percentage of completion method, compute the recognize gross profit for 2022: a. 52,500 b. 45,000 c. 97.500 d. 150,000 2. The CIP net of Progress billing is a. 27.500 current liability b. 32,500 current asset c. 167,500 current asset. d. 102,500 current liability
Cepparo Ltd. entered into a contract on January 1, 2021, to construct a new hotel for a client. The total fixed price for the contract is $35 million. The job was completed in December 2022. Details of the project are as follows: 2021 2022 $20,000,000 $11,000,000 Costs incurred in the period Estimated costs to complete the project 10,000,000 Customer billings in the period Cash collected in the period 18,000,000 17,000,000 17,000,000 15,000,000 Required: Calculate the amount of gross profit to be recognized each year using the percentage- of-completion method and prepare all the required journal entries for both years.
Shanahan Construction Company has entered into a contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period. 2020 2021 2022 Costs to date $270,000 $450,000 $610,000 Estimated costs to complete 330,000 150,000 –0– Progress billings to date 270,000 550,000 900,000 Cash collected to date 240,000 500,000 900,000 Instructions a. Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. b. Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.
Beck Construction Company began work on a new building project on January 1, 2023. The project is to be completed by December 31, 2025, for a fixed price of $149 million. The following are the actual costs incurred and estimates of remaining costs to complete the project that were made by Beck's accounting staff: Years 2023 2024 2025 Actual costs incurred in each year $ 42 million $ 69 million, $ 47 million Required: What amount of gross profit (or loss) would Beck record on this project in each year, assuming that Beck recognizes revenue for this project upon completion of the project? Years 2023 2024 2025 Note: Enter "None" if there is no requirement of recognizing profit or loss. Loss amounts should be indicated with a minus sign. Enter your answers in millions (1.e., 10,000,000 should be entered as 10). Estimated remaining costs to complete the project (measured at December 31 of each year) $ 84 million $ 69 million $0 million Gross Profit (or Loss) recognized million million…
How much is the Gross Profit/Loss Realized in 2018? Triple Take Construction Co. began construction of a project in 2017 for a contract price of P9,600,000. The project is to be completed in 4 years or in the year 2021. The following are the details regarding the construction project: 2017 2018 2019 Costs incurred to date 2160,000 4,500,000 7,520,000 Estimated cost to complete Progress Billings to date Cash Collections for the year 6,840,000 5,500,000 1,880,000 2304,000 4,320,000 7,680,000 1,728,000 3,240,000 5,760,000
Beck Construction Company began work on a new building project on January 1, 2023. The project is to be completed by December 31, 2025, for a fixed price of $159 million. The following are the actual costs incurred and estimates of remaining costs to complete the project that were made by Beck's accounting staff: Years 2023 2024 2025 Actual costs incurred in each year $ 43 million $ 71 million $ 48 million Years 2023 2024 2025 Required: What amount of gross profit (or loss) would Beck record on this project in each year, assuming that Beck recognizes revenue for this project upon completion of the project? Note: Enter "None" if there is no requirement of recognizing profit or loss. Loss amounts should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Gross Profit (or Loss) recognized Gross profit Gross profit Gross profit Estimated remaining costs to complete t project (measured at December 31 of each year) $ 86 million. $ 71…