19th Edition

ISBN: 9781947172685

Author: OpenStax

Publisher: OpenStax College

Textbook Question

Chapter 9, Problem 5TP

You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020.

• When would you recognize revenue for this payment?

• What method of accounting would you use for this construction project and why?

• What would be the benefits and challenges with your method selection?

• Give an example of your distribution selection and associated costs of the project (you may estimate based on other industry competitors).

• What might be some benefits and challenges associated with the other method of construction revenue recognition?

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Chapter 9, Problem 4TP

Chapter 9, Problem 6TP

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