Un February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for MR Inc for a price of $20 million. During 2018, costs of $4 million were incurred with estimated costs of $12 million yet to be incurred. In 2019, costs incurred were $8 million with remaining costs estimated to be $5 million. The project was completed in 2020 after additional costs of $5.5 million were incurred. The company's fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage-of-completion, and the bridge under construction is deemed to be under the control of MR Inc throughout the construction period. Compute the amount of revenue and gross profit or loss to be recognized by Arrow in 2018, 2019, and 2020.
Un February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for MR Inc for a price of $20 million. During 2018, costs of $4 million were incurred with estimated costs of $12 million yet to be incurred. In 2019, costs incurred were $8 million with remaining costs estimated to be $5 million. The project was completed in 2020 after additional costs of $5.5 million were incurred. The company's fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage-of-completion, and the bridge under construction is deemed to be under the control of MR Inc throughout the construction period. Compute the amount of revenue and gross profit or loss to be recognized by Arrow in 2018, 2019, and 2020.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter9: Operating Activities
Section: Chapter Questions
Problem 18PC
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Transcribed Image Text:On February 1, 2018, Arrow Construction Company entered into a three-year construction
contract to build a bridge for MR Inc for a price of $20 million. During 2018, costs of $4
million were incurred with estimated costs of $12 million yet to be incurred. In 2019, costs
incurred were $8 million with remaining costs estimated to be $5 million. The project was
completed in 2020 after additional costs of $5.5 million were incurred. The company's
fiscal year-end is December 31. Arrow recognizes revenue over time according to
percentage-of-completion, and the bridge under construction is deemed to be under the
control of MR Inc throughout the construction period.
Compute the amount of revenue and gross profit or loss to be recognized by Arrow in
2018, 2019, and 2020.
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