Complete the requirements of P 5-10 assuming that Westgate Construction reports under IFRS and concludes that the percentage-of-completion method is not appropriate.

In P 5-10

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.
Required:
1. Calculate the amount of revenue and gross profit to be recognized in each of the three years.
2. Prepare all necessary journal entries for each of the years (credit "various accounts" for construction costs incurred).
3. Prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract. Indicate whether any of the amounts shown are contract assets or contract liabilities.
4. Calculate the amount of revenue and gross profit to be recognized in each of the three years assuming the following costs incurred and costs to complete information:

5. Calculate the amount of revenue and gross profit to be recognized in each of the three years assuming the following costs incurred and costs to complete information:

Transcribed Image Text:

2018 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year $2,400,000 5,600,000 2,000,000 1,800,000 2019 $3,600,000 2,000,000 4,000,000 3,600,000 2020 $2,200,000 4,000,000 4,600,000 2019 2018 $2,400,000 5,600,000 2020 Costs incurred during the year Estimated costs to complete as of year-end 31,3 3,100,000 3.800.000 $ 3,200,000 2019 $3,800,000 4,100,000 2020 2018 $2,400,000 5,600,000 $3,900,000 Costs incurred during the year Estimated costs to complete as of year-end