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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it has one performance obligation which is satisfied over time. Using the following information for Year 1, compute Clorad’s (a) total estimated costs for the contract, (b) revenue to date, and (c) gross profit recognized.

Chapter 17, Problem 16RE, Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it

16 (a)

To determine

Compute the total estimated costs for the contract.

Explanation

Contract: Contract is an agreement among two parties or more parties which includes enforceable obligations and rights. A contract can be “written oral or implied” by ordinary business practices.

Calculate the amount of total estimated costs for the contract:

Particulars

(b)

To determine

Compute the amount of revenue to date.

(c)

To determine

Compute the amount of gross profit recognized.

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