par any com During 2023, Darwin Corporation started a construction job with a contract price of $4.20 million. Darwin ran into severe technical difficulties during construction but managed to complete the job in 2025. The contract is non-cancellable. Under the terms of the contract, Darwin sends billings as revenues are earned. Billings are non-refundable. The following information is available: Costs incurred to date 2023 Gross profit/(loss) Estimated costs to complete 3,150,000 $600,000 $2,100,000 $4,100,000 2024 2023 2,100,000 2025 Calculate the amount of gross profit or loss that should be recognized each year under the zero-profit method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter O for amounts.) 72000 -0- 2024 -72000 2025 100000

par any com During 2023, Darwin Corporation started a construction job with a contract price of $4.20 million. Darwin ran into severe technical difficulties during construction but managed to complete the job in 2025. The contract is non-cancellable. Under the terms of the contract, Darwin sends billings as revenues are earned. Billings are non-refundable. The following information is available: Costs incurred to date 2023 Gross profit/(loss) Estimated costs to complete 3,150,000 $600,000 $2,100,000 $4,100,000 2024 2023 2,100,000 2025 Calculate the amount of gross profit or loss that should be recognized each year under the zero-profit method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter O for amounts.) 72000 -0- 2024 -72000 2025 100000

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 19RE

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?
Newton Corp. has a contract to construct a $5,000,000 cruise ship at an estimated cost of $4,000,000. The company began construction of the cruise ship in early January 2021 and expects to complete the project sometime in late 2024. Newton Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances, Newton Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Newton Corp. expects to recover all its costs under the contract. During 2021 and 2022, the company has the following activity: 2021 2022 Costs to date $ 980,000 $2,040,000 Estimated costs to complete 3,020,000 1,960,000 Progress billings during the year 1,000,000 1,000,000 Cash…
Crane Constructors, Inc. has consistently used the percentage-of-completion method of recognizing income. In 2021, Crane started work on a $ 61740000 construction contract that was completed in 2022. The following information was taken from Crane's 2021 accounting records: Progress billings $ 19404000 Costs incurred 18522000 Collections 12096000 Estimated costs to complete 37044000 What amount of gross profit should Crane have recognized in 2021 on this contract? $ 3087000 $ 6174000 $ 4116000 $ 2058000
Beautiful Company sold a set of washing machine and a dryer for a total contract price of P100,000 on December 15, 2021. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. The washing machine was delivered on December 20, 2021 but the dryer was delivered only on January 5, 2022. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021? *How much is the revenue to be recognized in 2022?
On January 01, 2022, Noelydio entered into a contract with Baby Lyra to build an item of specialized equipment for delivery on April 30, 2023. However, the exact delivery date is hard to estimate. The amount of consideration specified in the contract is P300,000, but the customer is willing to pay a higher price if delivered earlier (i.e., amount will be increased or decreased by P500 for each day, depending on whether the actual delivery date is before or after April 30, 2023). Below is the sensitivity analysis: 20% likelihood that product will be delivered on April 30, 2023; 50% likelihood that product will be delivered 30 days before April 30, 2023; and 30% likelihood that product will be delivered 30 days after April 30, 2023. How much should Noelydio determine as the amount of transaction price for this contract?
Cullumber Construction Company had a contract starting April 2021, to construct a $43000000 building that is expected to be completed in September 2022, at an estimated cost of $39400000. At the end of 2021, the costs to date were $18124000 and the estimated total costs to complete had not changed. The progress billings during 2021 were $8420000 and the cash collected during 2021 was $5610000. Cullumber uses the percentage-of-completion method.For the year ended December 31, 2021, Cullumber would recognize gross profit on the building of $1656000. $0. $2810000. $1517358.
On July 1, 2017, Dinar obtained a contract to construct a building. The building was estimated to be built at a total cost of P15,000,000 and is scheduled for completion on October 2019. The contract contains a penalty clause to the effect that the other party was to deduct P35,000 from the contract price for each week of delay. On the other hand, if the contractor was able to finish the building earlier than agreed, it will be rewarded an amount equal to P50,000 for every month of early completion. Furthermore, cost escalation clause was included in the contract. In 2018, the estimated costs of particular construction material amounting to P520,000 were bought for P780,000. The increase in the contract price related to this cost escalation was approved by the client. Completion was delayed for 4 weeks. The records show: 2017 2018 2019 Costs incurred P1,750,000 6,440,000 1,085,000 Estimated cost to complete 7,000,000 1,810,000 -- Progress billings…
During 2020, Bing Corp. started a construction job with a total contract price of $1,050,000. Bing has consistently used the completed contract method. The job was completed on December 15, 2021. Additional data are as follows: 2020 , 2021 Actual costs incurred =$405,000, $457,000 Estimated remaining costs =405,000, — Billings to date =360,000, 690,000 Collections to date= 200,000, 480,000 For 2021, what amount should Bing recognize as gross profit?
Fat Boys Construction started a fixed price construction job in 2016 with a contract price of $20 million. The unrest in the Middle East during 2016 resulted in unpredicted increases in the price of oil and gas. This resulted in a sharp increase in material costs for the company during that year. By 2017, cost overruns on the project were incurred, however, Fat Boys was able to complete the project in the end of 2018 and remain profitable. The following is information related to the contract: Contract price: $20,000,000 2016 2017 2018 Costs till date $4,000,000 $8,000,000 $12,000,000 Estimated total costs $12,000,000 $12,000,000 $12,000,000 Billings during the year $3,600,000 $5,800,000 $10,600,000 Collections during the year $3,200,000 $5,800,000 $11,000,000 Required: Prepare the percentage completion method and prepare journal entries
In 2019, Austin Powers Corporation developed a new product that will be marketed in 2020. In connection with the development of this product, the following costs were incurred in 2019: research and development costs $400,000, materials and supplies consumed $60,000, and compensation paid to research consultants $125,000. It is anticipated that these costs will be recovered in 2022. What is the amount of research and development costs that Austin Powers should record in 2019 as a charge to expense?
On January 5, 2022, a company received a P5,000,000-complaint from one of its employees who suffered an accident last December 31, 2021, while in the production department. The company's legal counsel believed it would probably lose the case and the best estimate of the loss was P2,000,000. The complainant offered an out of court settlement of P3,000,000 but the company did not accept. On February 1, 2022, the court ordered the company to pay P2,500,000. The company paid the employee on February 10, 2022. The company's P10,000,000 comprehensive insurance policy has P1,000,000 deductible clauses. The company's financial statements were issued on March 15, 2022. What amount of liability from lawsuit should the company recognize in its December 31, 2021 statement of financial position? A company sells gift certificates for P750 each. On December 31, 2019, the company had 1,000 gift certificates outstanding. In 2020, the company sold 4,000 gift certificates while a total 3,600 were…
On January 5, 2022, a company received a P5,000,000-complaint from one of its employees who suffered an accident last December 31, 2021, while in the production department. The company's legal counsel believed it would probably lose the case and the best estimate of the loss was P2,000,000. The complainant offered an out of court settlement of P3,000,000 but the company did not accept. On February 1, 2022, the court ordered the company to pay P2,500,000. The company paid the employee on February 10, 2022. The company's P10,000,000 comprehensive insurance policy has P1,000,000 deductible clauses. The company's financial statements were issued on March 15, 2022. What amount of liability from lawsuit should the company recognize in its December 31, 2021 statement of financial position?