A construction company entered into a fixed-price contract to build an office building for $20 million. Construction costs incurred during the first year were $6 million, and estimated costs to complete at the end of the year were $9 million. The company recognize revenue over time according to percentage of completion. During the first year the company billed its customer $7 million, of which $5 million was collected before year-end. What would appear in the year-end balance sheet related to this contract? Note: Enter your answers in whole dollars and not in millions (i.e., $4 million should be entered as $4,000,000). Assets: Balance Sheet (Partial)
A construction company entered into a fixed-price contract to build an office building for $20 million. Construction costs incurred during the first year were $6 million, and estimated costs to complete at the end of the year were $9 million. The company recognize revenue over time according to percentage of completion. During the first year the company billed its customer $7 million, of which $5 million was collected before year-end. What would appear in the year-end balance sheet related to this contract? Note: Enter your answers in whole dollars and not in millions (i.e., $4 million should be entered as $4,000,000). Assets: Balance Sheet (Partial)
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 9MC
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Transcribed Image Text:A construction company entered into a fixed-price contract to build an office building for $20 million. Construction costs incurred
during the first year were $6 million, and estimated costs to complete at the end of the year were $9 million. The company recognizes
revenue over time according to percentage of completion.
During the first year the company billed its customer $7 million, of which $5 million was collected before year-end.
What would appear in the year-end balance sheet related to this contract?
Note: Enter your answers in whole dollars and not in millions (i.e., $4 million should be entered as $4,000,000).
Assets:
Balance Sheet (Partial)
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