estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. At At At 12/31/20 12/31/21 12/31/22 Contract costs incurred to date $327,800 $ 1,180,000 $2,090,400 Estimated costs to complete the contract 1,162,200 820,000 -0- Billings to Gumbel 300,000 1,110,000 1,870,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank. If an amount should be deducted then enter the amount using eithera negative sign prececeding the number e-g. -45 or parenthesis es. (45).)

estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. At At At 12/31/20 12/31/21 12/31/22 Contract costs incurred to date $327,800 $ 1,180,000 $2,090,400 Estimated costs to complete the contract 1,162,200 820,000 -0- Billings to Gumbel 300,000 1,110,000 1,870,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank. If an amount should be deducted then enter the amount using eithera negative sign prececeding the number e-g. -45 or parenthesis es. (45).)

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 25E: Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and...

See similar textbooks

Similar questions

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?
Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows: Required: 1. Compute the gross profit or loss recognized in 2019 and 2020. 2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.
Current Attempt in Progress In 2025, Carla Vista Construction Corp. began construction work under a 3-year contract. The contract price was $1,100,000. Carla Vista uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2025, are shown below. Accounts receivable Construction in process Balance Sheet Less: Billings Costs and recognized profit in excess of billings Income Statement $64,000 62,400 Income (before tax) on the contract recognized in 2025 Portion of contract billings collected How much cash was collected in 2025 on this contract? $17.400 $16,640 1,600
Curtiss Construction Company, Incorporated, entered into a fixed price contract with Axelrod Associates on July 1, 2024, to construct a four story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,240,000 The building was completed on December 31, 2026 Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows Percentage of completion Cests incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-11-2024 10% At 12-31-2025 $2,688,000 1,792,000 AT 12-11-2026 60% 100% $ 4,534,000 4,240,000 $363,000 3,267,000 724,000 2,250,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue…
On March 1, 2020, Pechstein Construction Company contracted to construct a factory building for Fabrik Manufacturing Inc. for a total contract price of $8,400,000. The building was completed by October 31, 2022. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2020, 2021, and 2022 are given below. 2020 2021 2022 Contract costs incurred during the year $2,880,000 $2,230,000 $2,190,000 Estimated costs to complete the contract at 12/31 3,520,000 2,190,000 –0– Billings to Fabrik during the year 3,200,000 3,500,000 1,700,000 Instructions a. Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) b. Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a…
On July 1, 2020, Oriole Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,880,000. On July 1, Oriole estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. At12/31/20 At12/31/21 At12/31/22 Contract costs incurred to date $288,800 $1,227,600 $2,078,500 Estimated costs to complete the contract 1,231,200 752,400 –0– Billings to Gumbel 290,000 1,090,000 1,820,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank.…
On March 1, 2025, Pharoah Construction Company contracted to construct a factory building for Bloom Manufacturing Inc. for a total contract price of $8,330,000. The building was completed by October 31, 2027. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Bloom for 2025, 2026, and 2027 are given below. 2025 2026 2027 Contract costs incurred during the year $2,662,800 $2,188,000 $2,389,200 Estimated costs to complete the contract at 12/31 Billings to Bloom during the year 3,180,000 3,677,200 2,389,200 3,480,000 -0- 1,670,000 (a1) Using the percentage-of-completion method, prepare a schedule to compute the profit or loss to be recognized as a result of this contract for the year ended December 31, 2025. (Ignore income taxes.) (If answer is 0, please enter O. Do not leave any fields blank. Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 2025 LA %
On July 1, 2025, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. On July 1, Torvill estimated that it would take between 2 and 3 years to complete the building. On December 31, 2027, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2025, 2026, and 2027. Total contract price $ 2,200,000 Contract costs incurred to date Estimated costs to complete the contract Progress Billings to Gumbel during year Instructions a. b. At 12/31/25 At 12/31/26 At 12/31/27 300,000 $1,200,000 $ 2,100,000 $ 1,200,000 300,000 800,000 1,100,000 800,000 Using the percentage-of-completion method, prepare a schedule to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2025, 2026, and 2027. (Ignore income taxes.) Using the cost recovery method, prepare a schedule to compute the profit or…
On February 1, 2020, Mar Contractors agreed to construct a building at a contract price of $15,400,000. Mar initially estimated total construction costs would be $12,000,000 and the project would be finished in 2023. Information relating to the costs and billings for this contract during 2020-2022 is as follows: 2020 2021 2022 Total costs incurred during the year 4,500,000 5,300,000 4,000,000 Estimated costs to complete 7,500,000 4,200,000 1,800,000 Customer billings to date 6,600,000 12,000,000 13,800,000 Collections to date 6,000,000 10,500,000 13,500,000 Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary journal entries for the years ended December 31, 2020, 2021, and 2022. Using the cost-recovery method,…
On February 1, 2020, Mar Contractors agreed to construct a building at a contract price of $15,400,000. Mar initially estimated total construction costs would be $12,000,000 and the project would be finished in 2023. Information relating to the costs and billings for this contract during 2020-2022 is as follows: 2020 2021 2022 Total costs incurred during the year 4,500,000 5,300,000 4,000,000 Estimated costs to complete 7,500,000 4,200,000 1,800,000 Customer billings to date 6,600,000 12,000,000 13,800,000 Collections to date 6,000,000 10,500,000 13,500,000 Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract and all the necessary journal entries for the years ended December 31, 2020, 2021, and 2022. Using the cost-recovery method,…
On July 1, 2020, Torvill Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,900,000. On July 1, Torvill estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. At 12/31/20 At 12/31/21 At 12/31/22 Contract costs incurred to date $ 300,000 $1,200,000 $2,100,000 Estimated costs to complete the contract 1,200,000 800,000 –0– Billings to Gumbel 300,000 1,100,000 1,850,000 Instructions a. Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) b. Using the…
National Construction agreed to construct a building for Berninger Corp with construction beginning on March 15, 2020. The project's contract price is $5,910,000, and National Construction estimates total construction costs would be $4,088,000. The project is scheduled to finish in 2022. Information relating to the costs and billings for this contract is as follows: 2020 2021 2022 Total costs incurred to date $1,533,000 $2,706,000 $4,655,000 Estimated costs to complete 2,555,000 1,804,000 -0- Customer billings to date 2,310,000 4,088,000 5,710,000 Collections to date 2,110,000 3,610,000 5,610,000 How much gross profit should be recorded for 2020, 2021, and 2022? Assuming National Construction uses the percentage-of-completion method of accounting for long-term contracts?