Ezra Construction Co. ("ECC") started business in 2020 and accepted its first contract to construct a building for $2.3 million, starting March 1, 2020. The planned completion date is December 2022. ECC uses the percentage-of-completion method of accounting for long-term contracts. Percentage-of-completion is measured based on total costs incurred compared to total estimated construction costs. ECC uses IFRS and its year-end is December 31. Certain data related to the contract are summarized below: Dec. 31, 2020 Dec. 31, 2021 370,000 Costs incurred during the year Est'd remaining costs to complete Progress billings to date Cash collections during the year 330,000 1,170,000 410,000 375,000 900,000 967,000 485,000 REQUIRED A. Prepare all required journal entries for 2020 and 2021. B. What should be the balance of Accounts Receivable as of December 31, 2021? C. What should be the balance of Construction-in-Progress (CIP) Inventory as of December 31, 2021? D. Ignore your answers to parts (A), (B), and (C) above. If the "Estimated remaining costs to complete" at December 31, 2020 was $2,126,000, instead of $1,170,000. How much should be the Income (Loss) before income taxes for the year 2020? Show your work clearly. E. Ignore your answers to parts (A), (B), (C), and (D) above. If the "Estimated remaining costs to complete" at December 31, 2021 was $1,870,000, instead of $900,000. How much should be the Income (Loss) before income taxes for the year 2021? Show your work clearly
Ezra Construction Co. ("ECC") started business in 2020 and accepted its first contract to construct a building for $2.3 million, starting March 1, 2020. The planned completion date is December 2022. ECC uses the percentage-of-completion method of accounting for long-term contracts. Percentage-of-completion is measured based on total costs incurred compared to total estimated construction costs. ECC uses IFRS and its year-end is December 31. Certain data related to the contract are summarized below: Dec. 31, 2020 Dec. 31, 2021 370,000 Costs incurred during the year Est'd remaining costs to complete Progress billings to date Cash collections during the year 330,000 1,170,000 410,000 375,000 900,000 967,000 485,000 REQUIRED A. Prepare all required journal entries for 2020 and 2021. B. What should be the balance of Accounts Receivable as of December 31, 2021? C. What should be the balance of Construction-in-Progress (CIP) Inventory as of December 31, 2021? D. Ignore your answers to parts (A), (B), and (C) above. If the "Estimated remaining costs to complete" at December 31, 2020 was $2,126,000, instead of $1,170,000. How much should be the Income (Loss) before income taxes for the year 2020? Show your work clearly. E. Ignore your answers to parts (A), (B), (C), and (D) above. If the "Estimated remaining costs to complete" at December 31, 2021 was $1,870,000, instead of $900,000. How much should be the Income (Loss) before income taxes for the year 2021? Show your work clearly
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 41P
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Transcribed Image Text:Ezra Construction Co. ("ECC") started business in 2020 and accepted its first contract to construct a
building for $2.3 million, starting March 1, 2020. The planned completion date is December 2022. ECC
uses the percentage-of-completion method of accounting for long-term contracts. Percentage-of-completion
is measured based on total costs incurred compared to total estimated construction costs. ECC uses IFRS
and its year-end is December 31. Certain data related to the contract are summarized below:
Dec. 31, 2020
Dec. 31, 2021
Costs incurred during the year
Est'd remaining costs to complete
Progress billings to date
Cash collections during the year
330,000
370,000
900,000
967,000
485,000
1,170,000
410,000
375,000
REQUIRED
A. Prepare all required journal entries for 2020 and 2021.
B. What should be the balance of Accounts Receivable as of December 31, 2021?
C. What should be the balance of Construction-in-Progress (CIP) Inventory as of December 31,
2021?
D. Ignore your answers to parts (A), (B), and (C) above. If the "Estimated remaining costs to
complete" at December 31, 2020 was $2,126,000, instead of $1,170,000. How much should be the
Income (Loss) before income taxes for the year 2020? Show your work clearly.
E. Ignore your answers to parts (A), (B), (C), and (D) above. If the "Estimated remaining costs to
complete" at December 31, 2021 was $1,870,000, instead of $900,000. How much should be the
Income (Loss) before income taxes for the year 2021? Show your work clearly
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