Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 8, Problem 8.8MC
During Yoar 1 Moriwothor Construction Company started a construction job with a contract price of $3 000.000 The job was completed in Year 2. and the company uses the percentage of completion method The following information is available for Year 1 and Year 2
| Year 1 | Year 2 | |
| Cost incurred to dato | $ 500,000 | $7,400,000 |
| Estimated cost to complete | 1,500,000 | 0 |
| Billmgs to date | 300,000 | 1,800,000 |
| Collections to date | 100,000 | 1,600,000 |
What amount of gross profit should Meriwether recognize for this job for Year 2?
- a. $250,000
- b. $1,000,000
- c. $350 000
- d. $600 000
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Springthorpe entered a three-year contract on 1 January 20X2 to build a factory. This is a contract where performance obligations are satisfied over time. The percentage of performance obligations satisfied is measured according to certificates issued by a surveyor. The contract price was $20 million. At 31 December 20X2 details of the contract were as follows.
$m
Costs to date
9
Estimated costs to complete
5
Amounts invoiced
4
Valuation certified complete work
4.5
Required:
Explain, with journal entry, how to account for above transaction in accordance to IFRS 15: Revenue from contract with customer and prepare extracted financial statements for the year ended 31 December 20X2
Jason Construction began work on a contract for $3,700,000. Costs which have been incurred during the year =$1,800,000Estimated costs to complete as of December 31= 1,200,000Billings done during the year1,650,000Collections during the year 975,000
The company uses percentage of Completion method. Calculate gross profit for the year.
If the company records revenue at a point in time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 31?
A. 5,100,000 C. 250,000B. 500,000 D. 100,000
Chapter 8 Solutions
Intermediate Accounting (2nd Edition)
Ch. 8 - What are the primary issues involved in revenue...Ch. 8 - What is the fundamental principle underlying the...Ch. 8 - What is the fundamental principle underlying the...Ch. 8 - Prob. 8.4QCh. 8 - Prob. 8.5QCh. 8 - How is a performance obligation defined?Ch. 8 - What are the two criteria to define a good or...Ch. 8 - Prob. 8.8QCh. 8 - What principles regarding timing and measurement...Ch. 8 - Prob. 8.10Q
Ch. 8 - What is variable consideration and what factors...Ch. 8 - Describe and contrast the two approaches used to...Ch. 8 - Prob. 8.13QCh. 8 - What factors should accountants consider to...Ch. 8 - Prob. 8.15QCh. 8 - How does a seller account for any consideration...Ch. 8 - Prob. 8.17QCh. 8 - What are the two exceptions to the general rule...Ch. 8 - What are the three criteria required to recognize...Ch. 8 - When an entity does not meet the three criteria...Ch. 8 - Prob. 8.21QCh. 8 - Prob. 8.22QCh. 8 - How does a firm estimate the degree completed...Ch. 8 - Can a firm record inventory out on consignment as...Ch. 8 - What method do agents in a transaction use to...Ch. 8 - Prob. 8.26QCh. 8 - What qualitative disclosures do the standards...Ch. 8 - All of the following are elements of a contract...Ch. 8 - Prob. 8.2MCCh. 8 - Telecom Co. enters into a two-year contract with a...Ch. 8 - The transaction price must reflect the time value...Ch. 8 - Prob. 8.5MCCh. 8 - When allocating the transaction price to separate...Ch. 8 - Which of the following indicators is not...Ch. 8 - During Yoar 1 Moriwothor Construction Company...Ch. 8 - All of the following are indicators that the...Ch. 8 - Prob. 8.10MCCh. 8 - Prob. 8.11MCCh. 8 - Identify a Contract with a Customer. Complete the...Ch. 8 - Prob. 8.2BECh. 8 - Identifying Performance Obligations. Perfect Party...Ch. 8 - Identifying Performance Obligations. Perfect Party...Ch. 8 - Estimating Variable Consideration. Gear Garage...Ch. 8 - Estimating Variable Consideration. Using the...Ch. 8 - Estimating Variable Consideration. Sellet...Ch. 8 - Estimating Variable Consideration. Seliet...Ch. 8 - Prob. 8.9BECh. 8 - Allocation of Transaction Price. Martin Software...Ch. 8 - Prob. 8.11BECh. 8 - Allocation of Transaction Price. Sycamore Sidewalk...Ch. 8 - Allocation of Transaction Price. Sycamore enters...Ch. 8 - Prob. 8.14BECh. 8 - Allocation of Transaction Price. Using the...Ch. 8 - When to Recognize Revenue. For each scenario...Ch. 8 - Prob. 8.17BECh. 8 - Prob. 8.18BECh. 8 - Percentage-of-Completion Method, Journal Entries....Ch. 8 - Prob. 8.20BECh. 8 - Sales with the Right of Return. Both incorporated...Ch. 8 - Sales with the Right of Return. Using the...Ch. 8 - Sales Returns. Historically, about 5% or the...Ch. 8 - Sales on Consignment. Hanna Lighting recertify...Ch. 8 - Determining Performance Obligations. Pagit Inc, a...Ch. 8 - Prob. 8.2ECh. 8 - Estimating Variable Consideration. King Rat Pest...Ch. 8 - Prob. 8.4ECh. 8 - Prob. 8.5ECh. 8 - Prob. 8.6ECh. 8 - Allocation of Variable Consideration. Green-Up Inc...Ch. 8 - Allocation of Variable Consideration. Green-Up Inc...Ch. 8 - Prob. 8.9ECh. 8 - Prob. 8.10ECh. 8 - Determination of When to Recognize Revenue. Far...Ch. 8 - Prob. 8.12ECh. 8 - Percentage-of-Completion Method. Gary Construction...Ch. 8 - Prob. 8.14ECh. 8 - Prob. 8.15ECh. 8 - Prob. 8.16ECh. 8 - Sales with the Right of Return. Webster Hall, Inc....Ch. 8 - Prob. 8.18ECh. 8 - Prob. 8.19ECh. 8 - Other Principal Agent Transactions, Net Revenue...Ch. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Comprehensive Revenue Recognition Problem. Casale...Ch. 8 - Prob. 8.4PCh. 8 - Determining When to Recognize Revenue. Megrew...Ch. 8 - Prob. 8.6PCh. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Percentage-of-Completion Method. R Wayne Computer...Ch. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Sales on Consignment. Pablo Products. Ltd sells...Ch. 8 - Prob. 1JCCh. 8 - Prob. 1FSCCh. 8 - Prob. 1SSCCh. 8 - Basis for Conclusions Case 1: Control According to...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What amount of RGP should be reported for the current year if the percentage of completion method is used for all contracts?arrow_forwardFollowing is the information relating to a Contract. amount $ 6,00,000. Contract price Raw materials 1$ 20,000 1,60,000 wages Sub - Contract 5,000 20,000 plant materials transferred to other 2,000 Contract. 7,600 General expenses. At the end the of year, Cash received from the Contractee was $2.50.000 being 80% of work Certified value materials unused at the end of the year was $18,000. plant to be depreciated at 20%. prepare Contract of account.arrow_forwardCS Company started work on three job sites during the current year. Any costs incurred are expected to be recoverable. Data relating to the three jobs are given below: Billings on Contract Site Contract Cost Estimated Costs to Complete Collections on Price Incurred 3,750,000 1,000,000 Billings 5,000,000 900,000 1,000,000 1 5,000,000 5,000,000 900,000 2 7.000,000 2.500.000 4,000,000 3 1.000,000 1,000,000 1.500,000 1. If the company recoeds revenue over time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 31? A. 5,500,000 B. S00,000 C 250,000 D. 100,000 2. If the company records revenue at a point in time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 317 A. 5,100,000 8. S00,000 C 250,000 D. 100,000arrow_forward
- MOC Construction Company started work on three job sites during the current year. Any costs incurred are expected to be recoverable. Data relating to the three jobs are given below (image): If the company records revenue at a point in time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 31? A. 5,100,000 B. 500,000 C. 250,000 D. 100,00arrow_forwardABC Construction uses the percentage-of-completion method for long-term construction contracts. A specific job was begun in 2003 and completed in 2005. The contract price was P14,000,000 and cost information as of each year –end is given below: 2003 2004 2005End of year estimated cost to complete P4,000,000 P2,000,000 - Annual cost incurred 4,000,000 4,000,000 P1,200,000Assuming ABC correctly recorded gross profit in 2003, how much gross profit should the company record in 2004?P -0- P3,000,000P 200,000 P3,200,000 How much is the construction in progress account in 2004?11,200,000 9,200,0008,000,000 0How much is the construction in progress account in 2004?11,200,000 14,000,0008,000,000 0arrow_forwardThe following data pertains to Bell Co's construction jobs, which commenced during 2021: Project 1 Project 2 Contract price 420,000 300,000 Costs incurred during 2019 240,000 280,000 Estimated additional cost to complete 120,000 40,000 What amount of gross profit/(loss) would Bell report in 2021 under the percentage of completion method, completed contract method, and zero profit method? 20,000; (20,000); (20,000) (20,000); 20,000; (20,000) 40,000; 0; 0 20,000; 0; 0arrow_forward
- CS Company started work on three job sites during the current year. Any costs incurred are expected to be recoverable. Data relating to the three jobs are given below: Site Contract Cost Estimated Costs Billings on Collections on Price Incurred to Complete Contract Billings 5,000,000 1 5,000,000 3,750,000 5,000,000 2 7,000,000 1,000,000 4,000,000 1,000,000 900,000 1,500,000 900,000 1,000,000 3 2,500,000 1,000,000 If the company records revenue at a point in time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 31? A. 5,100,000 B. 500,000 C. 250,000 D. 100,000arrow_forwardcS Company started work on three job sites during the current year. Any costs incurred are expected to be recoverable. Data relating to the three jobs are given below: Estimated Costs to Complete Site Contract Cost Billings on Collections on Price Incurred Contract Billings 5,000,000 3,750,000 5,000,000 5,000,000 2 7,000,000 1,000,000 4,000,000 900,000 900,000 3 2,500,000 1,000,000 1,000,000 1,500,000 1,000,000 If the company records revenue over time, how much must be shown as current asset in the balance sheet of MOC Construction Company as of December 31? A. 5,500,000 B. 500,000 C. 250,000 D. 100,000arrow_forwardDuring 2007, Frank Corp. started a construction job with a total contract price of $2,800,000. It was completed on December 15, 2008. Additional data are as follows: 2007 2008 Actual costs incurred in current year $1,080,000 $1,220,000 Estimated remaining costs 1,080,000 — Billed to customer 960,000 1,840,000 Received from customer 800,000 1,920,000 Under the completed-contract method, what amount should Frank recognize as gross profit for 2008? Group of answer choices 500,000 $250,000 $180,000 $380,000arrow_forward
- The following data from the just completed year are taken from the accounting records of KentonCompany: Sales $ 975,000Direct labor cost $ 165,000Raw material purchases $ 229,000Selling expense $ 48,750Administrative expenses $ 146,250Manufacturing overhead applied to work in process $ 180,000Actual manufacturing overhead costs $ 175,050Inventories: Beginning EndingRaw materials $ 18,000 $ 17,500Work in process $ 20,000 $ 14,750Finished goods $ 9,000 $ 11,000 Required: 1.Prepare a schedule of cost of goods manufactured. Assume all raw materials used in productionwere direct materials.2. Prepare a schedule of cost of goods sold. Assume that the company’s underapplied or overappliedoverhead is closed to Cost of Goods Sold 3. Prepare an income statement.arrow_forwardRecording Long- Term Construction: Recognize Revenue at a Point in Time and Over Time Watson Construction Company contracted to build a plant for $500,000. Construction started in January of Year 1 and was completed in November of Year 2. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. As of December 31 Year 1 Year 2 Costs incurred $290,000 $120,000 Estimated costs to complete 125,000 Billings 270,000 230,000 Cash collections 250,000 250,000 Required Point in Time Over Time a. Provide the Year 1 and Year 2 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses. ●Note: If a journal entry isn't required on any of the dates shown, select "N/A—debit" and "N/A—credit" as the account names and leave the Dr. and Cr. answers blank (zero). Year 1 Account…arrow_forwardUbe Construction Company has consistently used the percentage of completion. On January 10, 2007, Ube began work on a P 6,000,000 construction contract. At the inception date, the estimated cost of construction was P 4,500,000. The following relate to the progress of the contract: Income recognized at 12/31/2007 P 600,000 Costs incurred 1/10/2007 through 12/31/2008 3,600,000 Estimated cost to complete at 12/31/2008 1,200,000 How much income should Ube recognize for the year ended December 31, 2001? P 300,000 P 525,000 P 600,000 P 900,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Accounting for Finance and Operating Leases | U.S. GAAP CPA Exams; Author: Maxwell CPA Review;https://www.youtube.com/watch?v=iMSaxzIqH9s;License: Standard Youtube License