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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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Wells Corp. appropriately determined that Construction Project A was a single performance obligation that is satisfied over time. For this project, Wells had previously recognized revenue of $230,000 out of a total of $800,000 for the project. During the current year, Wells accumulated the following information about this project:

  • construction costs incurred for the year, $92,000
  • construction costs incurred to date (including this year’s costs), $200,000
  • estimated costs to complete, $300,000

Based on the previous information, prepare a schedule to determine the amount of loss that Wells should recognize for the current year.

To determine

Prepare a schedule to ascertain the amount of loss recognized by Corporation W during the current year.

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.

Schedule to ascertain the amount of loss recognized by Corporation W during the current year is prepared as follows:

ParticularsAmount
Construction costs incurred to date $200,000
Estimated costs to complete $300,000
Total estimated costs$500,000
Percent complete ($200,000÷$500,

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