Sunshine Bhd. entered a contract to build a building for its customer with the agreed total price of $3,200,000. The project is expected to last for 3 years with the total cost of $1,600,000. The following table shows the progress of the work:   31 Dec 2018 31 Dec 2019 31 Dec 2020 Completion (Market Value) $950,000 $2,600,000 $3,200,000 Cost incurred to date $400,000 $1,000,000 $1,600,000 Required: For each year, compute the recognized profit based on input method. For each year, compute the recognized profit based on output method.

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
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Sunshine Bhd. entered a contract to build a building for its customer with the agreed total price of $3,200,000. The project is expected to last for 3 years with the total cost of $1,600,000. The following table shows the progress of the work:

 

31 Dec 2018

31 Dec 2019

31 Dec 2020

Completion (Market Value)

$950,000

$2,600,000

$3,200,000

Cost incurred to date

$400,000

$1,000,000

$1,600,000

Required:

  1. For each year, compute the recognized profit based on input method.
  2. For each year, compute the recognized profit based on output method.                                                   Please answer required 1,2                          
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