Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 5, Problem 5.17E
Long-term contract; revenue recognition over time and at a point in time
• LO5–9
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below:
| 2018 | 2019 | |
| Costs incurred during the year | $ 300,000 | $ 1,575,000 |
| Estimated costs to complete as of 12/31 | 1,200,000 | –0– |
| Billings during the year | 380,000 | 1,620,000 |
| Cash collections during the year | 250,000 | 1,750,000 |
Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time.
3. Prepare a partial
4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.
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Dinesh Bhai
Subject:
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000. The project began in 2021 and
was completed in 2022 Data relating to the contract are summarized below:
2021
$ 372,000 $1,899,00e
1,488,eee
524,000
318,eee
2022
Costs incurred during the year
Estimated costs to complete as of 12/31
Billings during the year
Cash collections during the year
2,336,800
2,542, 000
Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue
over time occording to percentege of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 ssuming this project does not qualify
for revenue recognition over time.
3. Prepare a partial balance sheet to show how the information related to this contract would be presented ot the end of 2021
assuming Nortel recognizes revenue over time according to percentege of completion.
4. Prepare a partial…
Chapter 5 Solutions
Intermediate Accounting
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