Exercise 5-19 Long-term contract, revenue recognition over time; loss projected on entire On February 1, 2018, Amow

Exercise 5-19 Long-term contract, revenue recognition over time; loss projected on entire On February 1, 2018, Amow Consructon Company entored into a threo-yoar c a bndge for a prce of $4,020 000 yet to be ncurred Blings of $2,500 000 were sent and cash colected was $2,250 000 onstruction contract to baid 58,000 000 Duning 2016, costs of $2,020 000 were incurred wth estimated cass af n 2017, costs incurred were $2,500,000 with nemaning coets esirmañed to be $3 60u were $2,750 000, and $2,475.000 cesh was collected The project was completed in 2010 ater costs of $3,500 000 were incured The companys tscal year-end is december 31 Arow reccgrizes revenue ower tme acconding to perce tage of compieson co0 2017 blings adcitional Required 1. Compute the amount of revenue and gross proft or less to be recognized in 2016 2017, and 2018 using the pecentage of completion method? (Do not round intermediate calcuiations. Round your final answers to the nearest whole dollar. Percentages of completion Choose numerator Choese denom nato 2016 2017 2018 1000000% Recognized in Recognized in To date 2016 $ 2,666,667 prior years Construction revenue Constructon expense Gross profit (lass) S 2,606 667 2017 To date Recognized in Recognized in prior years 2017 Construction revenue Construcbion expense Gross profit (loss) 2018 To date Recognized in Recognized in prior years 2018 Construction revenue Construction expense Gross proist (loss)

Exercise 5-19 Long-term contract, revenue recognition over time; loss projected on entire On February 1, 2018, Amow Consructon Company entored into a threo-yoar c a bndge for a prce of $4,020 000 yet to be ncurred Blings of $2,500 000 were sent and cash colected was $2,250 000 onstruction contract to baid 58,000 000 Duning 2016, costs of $2,020 000 were incurred wth estimated cass af n 2017, costs incurred were $2,500,000 with nemaning coets esirmañed to be $3 60u were $2,750 000, and $2,475.000 cesh was collected The project was completed in 2010 ater costs of $3,500 000 were incured The company’s tscal year-end is december 31 Arow reccgrizes revenue ower tme acconding to perce tage of compieson co0 2017 blings adcitional Required 1. Compute the amount of revenue and gross proft or less to be recognized in 2016 2017, and 2018 using the pecentage of completion method? (Do not round intermediate calcuiations. Round your final answers to the nearest whole dollar. Percentages of completion Choose numerator Choese denom nato 2016 2017 2018 1000000% Recognized in Recognized in To date 2016 $ 2,666,667 prior years Construction revenue Constructon expense Gross profit (lass) S 2,606 667 2017 To date Recognized in Recognized in prior years 2017 Construction revenue Construcbion expense Gross profit (loss) 2018 To date Recognized in Recognized in prior years 2018 Construction revenue Construction expense Gross proist (loss)

Expert Answer

 

1
2016        20,00,000                             60,00,000 33.33%
2017        45,00,000                             81,00,000 55.56%
2018        83,00,000                             83,00,000 100.00%
2016
To date Recognised in prior years recognised in 2016
Construction revenue        26,66,666                 26,66,666
Construction expenses        20,00,000                 20,00,000
Gross profit          6,66,666                   6,66,666
2017
To date Recognised in prior years recognised in 2017
Construction revenue        44,44,444                             26,66,666                 17,77,778
Construction expenses        45,44,444                             20,00,000                 25,44,444
Gross profit        -1,00,000                               6,66,666                  -7,66,666
2018
To date Recognised in prior years recognised in 2018
Construction revenue        80,00,000                             44,44,444                 35,55,556
Construction expenses        83,00,000                             45,44,444                 37,55,556
Gross profit        -3,00,000                              -1,00,000                  -2,00,000
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