In 2021, Montana Corp. entered into a contract to begin work on a two-year project. Montana recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2021 (from construction progress billings) $37.5 $140 Actual construction costs incurred in 2021 Cash collected on project during 2021 $105 Construction in progress, 12/31/2021 Estimated percentage of completion during 2021 Selected Amounts O $70,000,000 O $60,000,000 $35,000,000 O $105,000,000 $210 What is the amount of gross profit on the project recognized by Montana during 2021? 50 %

In 2021, Montana Corp. entered into a contract to begin work on a two-year project. Montana recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2021 (from construction progress billings) $37.5 $140 Actual construction costs incurred in 2021 Cash collected on project during 2021 $105 Construction in progress, 12/31/2021 Estimated percentage of completion during 2021 Selected Amounts O $70,000,000 O $60,000,000 $35,000,000 O $105,000,000 $210 What is the amount of gross profit on the project recognized by Montana during 2021? 50 %

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 26E

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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?
In 2021, Cupid Construction Co. (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2021 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2021 $ 135 Cash collected on project during 2021 $ 105 Construction in progress, 12/31/2021 $ 207 Estimated percentage of completion during 2021 60 % How much cash remains to be collected by CCC on the project?
In 2021, the westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Balance Sheet (Partial) Current assets: Accounts receivable Construction in progress 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round intermediate calculations.) Less: Billings Costs and profit in excess of billings Current liabilities: Answer is complete but not entirely correct. ✓ ✓ 2021 2021 $2,184,000 2022 $3,510,000 5,616,000 2,106,000 2,120,000 3,574,000 4,306,000 3,400,000 4,740,000 1,860,000 $ 2,800,000✔ 2,120,000 $ 260,000 $ 680,000
GinebraCorporation recognizes construction revenue and cost using the percentage of completion method. During 2021, a single long-term project was begun which continued through 2021. Information on the project follows: 2021. 2022 Partial billing on contract 1,000,000. 4,200,000 Accounts receivable 1,000,000 3,000,000 Construction cost 1,050,000 1,920,000 Construction in progress 1,220,000 3,640,000 What is the gross profit recognized from this long-term construction contract in year 2021 and 2022, respectively? 2021 2022 A.220,000. 2,280,000 B.170,000. 500,000 C.220,000. 1,000,000 D.170,000. 1,280,000
In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2024 $ 135 Cash collected on project during 2024 $ 105 Construction in progress, 12/31/2024 $ 207 Estimated percentage of completion during 2024 60% What were the construction billings by CCC during 2024?
In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2024 $ 135 Cash collected on project during 2024 $ 105 Construction in progress, 12/31/2024 $ 207 Estimated percentage of completion during 2024 60% What are CCC's estimated remaining construction costs on the project at the end of 2024?
At the beginning of 2021, Florida Road Construction entered into a contract to build a road for the government. Construction will take four years. The following information as of December 31, 2021 is available: Revenue according to contract 10,000,000 Total expected cost 8,000,000 Cost incurred during 2021 1,200,000 Cost incurred during 2022 2,400,000 Cost incurred during 2023 Cost incurred during 2024 1,600,000 2,800,000 Compute for the reported Gross Profit of Florida using: Year 2021 2022 2023 2024 Completed Contract Method Zero Profit Method Percentage of Completion Method
Pharoah Construction entered into a contract to construct a bridge for a contract price of $2.95 million. Construction began in 2019 and was completed in 2021. Below are the details of the transactions related to the contract: 2019 2020 2021 Costs incurred during the year $649,000 $836,000 $693,900 Estimated costs to complete 1,427,800 515,000 0 Calculate the revenue, expenses and gross profit to be recognized each year using the percentage-of-completion method. (Round the percentage completion to 2 decimal places, e.g. 52.75% and other answers to 0 decimal places, e.g. 1,525.) 2019 2020 2021 Revenue $ $ $ Expenses Gross Profit $ $ $
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Costs incurred during the year Estimated costs to complete as of year-end Westgate recognizes revenue over time according to percentage of completion. Revenue Gross profit (loss) 2022 2021 $2,184,000 $3,510,000 5,616,000 2,106,000 2021 2,120,000 1,860,000 2022 . Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs curred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest hole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 $2,184,000 5,616,000 2023 2023 $2,316,600 3,574,000 4,306,000…
Jhun Co. recognizes construction revenues and expenses using the percentage of completion method. During 2019, a single long-term contract was started, which continued through the year 2020. Information the project follows: 2019 Account receivable on contract 100,000 Construction expense 105,000 Construction in progress 122,000 Partial billings on contract 100,000 2020 Account receivable on contract 300,000 Construction expense 192,000 Construction in progress 364,000 Partial billings on contract 420,000 Profit recognized in 2019 should be? Profit recognized in 2020 should be?
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $2,581,000 $2,347,000 $3,049,200 Estimated costs to complete as of year-end 6,319,000 2,772,000 0 Billings during the year 2,090,000 2,838,000 5,072,000 Cash collections during the year 1,845,000 2,900,000 5,255,000 Westgate recognizes revenue over time according to percentage of completion. 2.b. In the journal below,…
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $2,581,000 $2,347,000 $3,049,200 Estimated costs to complete as of year-end 6,319,000 2,772,000 0 Billings during the year 2,090,000 2,838,000 5,072,000 Cash collections during the year 1,845,000 2,900,000 5,255,000 Westgate recognizes revenue over time according to percentage of completion. 2-a. In the journal below, complete the…