Answered: Program Setup: • Feasibility Study…

Business

Accounting

Program Setup: • Feasibility Study (completed six months ago): • Supplier Training: $12,500,000 1,500,000 7,500,000

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 35E

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This problem has subparts that still need to be answered Assume Avaya contracted to provide a customer with Internet infrastructure for $2,350,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: 2024 2025 Costs incurred during the year $ 328,000 $ 1,830,000 Estimated costs to complete as of 12/31 1,312,000 0 Billings during the year 436,000 1,690,000 Cash collections during the year 341,000 1,785,000 Required: Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time…
Company A decided to build a road. The duration of the project was 4 years and the fee amounts to € 300,000.1st year the expenses of the company amounted to 30,000 €. A's management estimates that the completion of the project will cost an additional 120,000 and this estimate is considered reliable. Within the same year, an amount of € 60,000 was collected, according to the contract2nd year the costs of the company amounted to € 50,000 and it is reliably predicted that the completion of the project will cost an additional € 110,000. Within the same year, an amount of € 50,000 was collected, according to the contract.3rd year the costs of the company amounted to € 60,000 and it is reliably predicted that the completion of the project will cost an additional € 30,000. Within the same year, an amount of € 50,000 was collected, according to the contract.4th year the company completed the project. The expenses of the 4th year amounted to € 40,000. Within the same year, the entire amount of…
Research and development cost for Headway Corporation for the year ended December 31, 2024:Project A. Expected total revenues P7,000,000, starting in early 2023. Expected total costs,will be P5,000,000. Costs incurred to date, all in 2014, are P2,200,000.Project B. Expected total revenues P6,000,000. Costs incurred to date are P3,500,000. Expected total costs are P4,500,000. The commencement of commercial sales is uncertain due to problems in raising funds to cover the final development costs.Project C. Expected total revenues, P3,500,000 with P1,000,000 of revenue already earned in 2024. Total development costs incurred, all in 2024, were P3,800,000.Research projects. Total costs spend in 2024 were P I,500,000.What amount of development cost should Headway Company capitalize in 2024? a. 2,200,000 b. 5,700,000 c. 6,000,000 d. 7,500,000
ABC Construction Company began work on a contract in 2022 and completed the contract in 2023. The total contact price was P8,500,000. Information related to the construction project are as follows: 2022 2023 Costs incurred during the year P1,200,000 P6,250,000 Estimated costs to complete 4,800,000 - Progress billings during the year 1,450,000 7,050,000 Collections during the year 800,000 6,000,000 How much is the gross profit to be recognized in 2023?
Consultant Inc. is a firm of consulting engineers, newly established to advise on a large project taking three years to complete. Their fee for this work is a percentage of the total project costs, payable on completion of the project. In the interim, advances on the final fee are made at six-monthly intervals. The total project costs will not be known until the project is completed. The following advances were received by Consultant Inc. during the three-year period: Year ended 31 December 20x0 K25, 000 Year ended 31 December 20x1 K30, 000 Year ended 31 December 20x2 K30, 000 When the total costs were computed during the year ended 31 December 20x0, it was found that a further sum of K50, 000 was due to Consultant Inc. REQUIRED; Explain how Consultant Inc. would show the payments made during the periods covered by the project. Justify your explanation…
Project R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure):Beginning of Year 1 (£150,000) (contractors’ fees)Beginning of Year 2 (£250,000) (contractors’ fees)Beginning of Year 3 (£250,000) (contractors’ fees)End of Year 3 £1,000,000 (sales)Project S carries out all the development work in-house by purchasing the necessary equipment and using the company’s own staff. The estimated cashflows for Project S are:Beginning of Year 1 (£150,000) (New equipment)Continuous payments Through Year 1 (£75,000) (Staff Cost)Continuous payments Through Year 2 (£250,000) (Staff Cost)Continuous payments Through Year 3 (£250,000) (Staff Cost)End of Year 3 £1,000,000 (sales) Find the internal rate of return for Project R and Project S and hence determine which project is more favourable using this criterion.
Project R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure): Beginning of Year 1 (£150,000) (contractors’ fees) Beginning of Year 2 (£250,000) (contractors’ fees) Beginning of Year 3 (£250,000) (contractors’ fees) End of Year 3 £1,000,000 (sales) Project S carries out all the development work in-house by purchasing the necessary equipment and using the company’s own staff. The estimated cashflows for Project S are: Beginning of Year 1 (£150,000) (New equipment) Continuous payments Through Year 1 (£75,000) (Staff Cost) Continuous payments Through Year 2 (£250,000) (Staff Cost) Continuous payments Through Year 3 (£250,000) (Staff Cost) End of Year 3 £1,000,000 (sales) a) Calculate the net present value for Project R and Project S using a risk discount rate of 20% per annum. Using net present values as a criterion, which project is preferable? b) Find the internal rate of return for Project R and…
Project R delegates all the development work to outside companies. The estimated cashflows for Project R are (where brackets indicate expenditure):Beginning of Year 1 (£150,000) (contractors’ fees)Beginning of Year 2 (£250,000) (contractors’ fees)Beginning of Year 3 (£250,000) (contractors’ fees)End of Year 3 £1,000,000 (sales)Project S carries out all the development work in-house by purchasing the necessary equipment and using the company’s own staff. The estimated cashflows for Project S are:Beginning of Year 1 (£150,000) (New equipment)Continuous payments Through Year 1 (£75,000) (Staff Cost)Continuous payments Through Year 2 (£250,000) (Staff Cost)Continuous payments Through Year 3 (£250,000) (Staff Cost)End of Year 3 £1,000,000 (sales) Calculate the net present value for Project R and Project S using a risk discount rate of 20% per annum. Using net present values as a criterion, which project is preferable?
profile-image Time remaining: 00 : 09 : 41 Accounting We have the following data for a power plant: 1 MW CENTRAL ECONOMIC BALANCE Power: 1 Mwa Maintenance cost: 3% per year Initial cost of operation: 5% per year Regulated Rate: $0.015/kWh (20 years) Project cost = $750,000.00 Plant factor= 60% Energy: 5256000 KWh Income from regulated tariff: 78840 Annual revenue increase: 6% Initial maintenance cost/year of annual maintenance (2% installation): $ 22,500.00 Annual maintenance increase: 5% Initial cost of operation/year (1% Installation) $ 37,500.00 Annual operation increase: 3% It is assumed that in year 10, an equipment update will be carried out whose cost will be 25% of the value of the investment = $187,500.00 SOLVE: In what year will the investment be recovered?
Evaluate the following project using PW method. The MARR is set to 12% per year Initial Investment - 13,000 Useful Life - 15 yrs Annual Operating Expenses - 1000 Overhaul cost EOY 5 - 200 Overhaul cost EOY 10 - 550
MANAGEMENT OF TECHNOLOGY Project Selection Based on Economic Analysis 0.1 = MARR' Technology "A" Year Cost Income Net NPV IRR 0 -$650,000 $0 -$650,000 $148,621 17% 1 $0 $125,000 $125,000 2 $0 $175,000 $175,000 3 -$275,000 $300,000 $25,000 4 $0 $400,000 $400,000 5 $200,000 $200,000 $400,000 Technology "B" Year Cost Income Net NPV IRR 0 -$750,000 $0 1 $0 $175,000 2 $0 $200,000 3 -$370,000 $225,000 4 $0 $375,000 5 $300,000 $350,000 Technology "C" Year Cost Income Net NPV IRR 0 -$808,300 $0 1 $0 $200,000 2 $0 $225,000 3 -$265,000 $250,000 4 $0 $400,000 5 $202,000 $325,000 Increment B-A Year Cost Income Net NPV IRR 0 -$100,000 $0 -$100,000 -$23,453 5% 1 $0 $50,000 $50,000 2 $0 $25,000 $25,000 3 -$95,000 -$75,000 -$170,000 4 $0 -$25,000 -$25,000 5 $100,000 $150,000 $250,000 Increment C-A Year Cost Income Net NPV IRR 0 -$158,300 $0 1…
Project A has the following information: Year 0 1 2 3 4 5 Initial investment outlay 125,000 Cash inflows 75,000 80,000 95,000 95,000 86,250 Personnel expenses 22,500 22,500 22,500 22,500 22,500 Material expesnes 15,000 20,000 22,500 22,500 22,500 Maintenance expenses 2,500 2,500 5,000 8,750 10,000 Other cash outflows 3,750 3,750 3,750 5,000 5,625 Liquidation value 12,500 Project B has the following information: Year 0 1 2 3 4 5 Initial investment outlay 225,000 Cash inflows 155,000 140,000 108,750 93,750 125,000 Personnel expenses 27,500 27,500 27,500 27,500 27,500 Material expenses 25,000 22,500 22,500 22,500 24,000 Maintenance expesnses 8,750 11,250 17,500 15,000 14,000 Other cash outflows 6,250 3,750 3,750 3,750 4,000 Liquidation value 15,000 The Discount Rate is 8%Assess the relative profitability of the two options using the following methods:(i) The Annuity Method(ii) The Net…