Answered Essay: On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington estim

Compute the revenue and gross profit will Sanderson report in its income statements related to this contract assuming this project does not qualify for revenue recognition over time

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington estimated costs to complete at year-end for the life of the contract are as follows (S in millions);: million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and 2018 2019 2020 Costs ineurred during the year Estinated costs to compiete as of December 31 30 \$140 \$40 170 80 Required: 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. 2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognitioR over time. 3. Suppose the estimated costs to complete at the end of 2019 are \$170 million instead of \$80 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. Complete this question by entering your answers in the tabs below Required 1 Required 2Required 3 Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time. (Enter your answers in millions. Loss amounts should be indicated with a minus sign.) show less ▲ ross Year 2018 2019s 2020 350 million 01 million 0 million s million million mdlion Required! Required 3

 ans 1 2018 2019 20120 Contract price \$350 \$350 \$350 Actual costs to date \$30 \$170 \$210 Estimated costs to complete 170 80 0 Total estimated costs \$200 \$250 \$210 Estimated gross profit Actual cost to date Estimated total cost %complete to date 2018 30 200 15 2019 170 250 68 2020 210 100% 2018 To date Recognized in prior year Recgnized in 2018 Construction revenue 53 0 53 (350*15%) Construction expenses -30 0 -30 Gross profit 23 0 23 2019 To date Recognized in prior year Recgnized in 2019 A-B Construction revenue 238 53 186 (350*68%) Construction expenses -120 -30 -90 Gross profit 118 23 96 2020 To date A Recognized in prior year B Recgnized in 2020 A-B Construction revenue 350 238 112 Construction expenses -210 -120 -90 Gross profit 140 118 22 ans 2 Rev rec Gross profit 2018 0 0 2019 0 0 2020 350 140
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