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 loss to be recognized as a result of this contract for the years ended December 31, 2025, 2026, and 2027. (Ignore income taxes.)

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 loss to be recognized as a result of this contract for the years ended December 31, 2025, 2026, and 2027. (Ignore income taxes.)

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 10C

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