Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts. Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract. (a) To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method. Given information: All the information related to W Company is provided in the question document.

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Answer 1

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Chapter 18, Problem 9CA

To determine

Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts.

Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract.

(a)

To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method.

Given information: All the information related to W Company is provided in the question document.

To determine

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

To determine

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

To determine

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

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Florida Kitchens produces high-end cooking ranges. The costs to manufacture and market the ranges at the company’s volume of 3,000 units per quarter are shown in the following table: Unit manufacturing costs Variable costs $ 1,440 Fixed overhead 720 Total unit manufacturing costs $ 2,160 Unit nonmanufacturing costs Variable 360 Fixed 840 Total unit nonmanufacturing costs 1,200 Total unit costs $ 3,360 The company has the capacity to produce 3,000 units per quarter and always operates at full capacity. The ranges sell for $4,000 per unit. Required: a. Florida Kitchens receives a proposal from an outside contractor, Burns Electric, who will manufacture 1,200 of the 3,000 ranges per quarter and ship them directly to Florida’s customers as orders are received from the sales office at Florida. Florida would provide the materials for the ranges, but Burns would assemble, box, and ship the ranges. The variable manufacturing costs would be…

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Answer 2

Question

Chapter 18, Problem 9CA

To determine

Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts.

Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract.

(a)

To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method.

Given information: All the information related to W Company is provided in the question document.

To determine

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

To determine

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

To determine

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

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Answer 3

Question

Chapter 18, Problem 9CA

To determine

Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts.

Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract.

(a)

To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method.

Given information: All the information related to W Company is provided in the question document.

To determine

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

To determine

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

To determine

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

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Answer 4

Question

Chapter 18, Problem 9CA

To determine

Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts.

Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract.

(a)

To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method.

Given information: All the information related to W Company is provided in the question document.

To determine

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

To determine

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

To determine

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

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Answer 5

Chapter 18, Problem 9CA

To determine

Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts.

Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract.

(a)

To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method.

Given information: All the information related to W Company is provided in the question document.

To determine

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

To determine

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

To determine

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

Answer 6

Chapter 18, Problem 9CA

To determine

Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts.

Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract.

(a)

To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method.

Given information: All the information related to W Company is provided in the question document.

Answer 7

Chapter 18, Problem 9CA

To determine

Percentage-of-completion method: It is a method where the incomes and expenses are recorded based on the percentage of the work is completed. This method is used for long term contracts.

Completed contract method: Under this method the revenue is not recognized over the project life but is recognized only upon the completion of the contract.

(a)

To explain: To explain the theoretical justification for W Company’s use of the percentage-of-completion method.

Given information: All the information related to W Company is provided in the question document.

Answer 8

To determine

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

Answer 9

To determine

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

Answer 10

To determine

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

Answer 11

To determine

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

Answer 12

To determine

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

Answer 13

To determine

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 18 - Prob. 1Q Ch. 18 - Prob. 2Q Ch. 18 - Prob. 3Q Ch. 18 - Prob. 4Q Ch. 18 - Prob. 5Q Ch. 18 - Prob. 6Q Ch. 18 - Prob. 7Q Ch. 18 - Prob. 8Q Ch. 18 - Prob. 9Q Ch. 18 - Prob. 10Q

Concept explainers

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.

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Chapter 18 Solutions

Concept explainers

(b) To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements. Given information: All the information related to W Company is provided in the question document.

(c) To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion. Given information: All the information related to W Company is provided in the question document.

(d) To discuss: To discuss the effect on earnings per share in the 2nd year. Given information: All the information related to W Company is provided in the question document.

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Chapter 18 Solutions

(b)

To determine the accounting for progress billings and discuss the classification of progress billing in W Company’s financial statements.

Given information: All the information related to W Company is provided in the question document.

(c)

To identify: To identify the income recognized in the second year of the 4-year contract can be determined using the cost-to-cost method of determining percentage of completion.

Given information: All the information related to W Company is provided in the question document.

(d)

To discuss: To discuss the effect on earnings per share in the 2nd year.

Given information: All the information related to W Company is provided in the question document.