Spacey has been hired to build a new space shuttle for NASA for $2 Billion that will
Question:
Spacey has been hired to build a new space shuttle for NASA for $2 Billion that will transport humans to Mars. Spacey expects it will take five years to build the shuttle. They use the percentage of completion method to account for long-term construction projects. Use the following information about the first 4 years of construction to answer the following questions. Year 1 Year 2 Year 3 Year 4 Cash Cost incurred to date $200 million $390 million $1,100 million $1,400 million Estimated future costs $800 million $910 million $1,100 million $700 million Current year Billings $350 million $300 million $500 million $400 million Current year Cash coll $270 million $420 million $490 million $405 million What is the income statement impact (current period profit or loss) for Year 3?
What will they record on the balance sheet related to this contract (please provide both the amount and indicate whether it is a liability [billings in excess of revenue] or an asset [revenue in excess of billings]) for Year 3?
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman