Answered step by step
Verified Expert Solution
Question
1 Approved Answer
18-9 (Long-Term Contract-Percentage-of-Complction) Widjaja Company is accounting for a long term construction contract using the percentage-of-completion method. It is .1 4-year contract that currently in
18-9
(Long-Term Contract-Percentage-of-Complction) Widjaja Company is accounting for a long term construction contract using the percentage-of-completion method. It is .1 4-year contract that currently in its second year. The latest estimates of total contract costs indicate that the contract will be completed at a profit to Widjaja Company. Instructions What theoretical justification is there for Widjaja Company's use of the percentage-of-completion method? How would progress billings be accounted for? Include in your discussion the classification of progress billings in Widjaja Company financial statements. How would the income recognized in the second year of the 4-year contract be determined using the cost-to-cost method of determining percentage of completion? What would be the effect on earnings per share in the second year of the 4-year contract of using the percentage-of-completion method instead of the completed-contract method? Discuss. (AICPA adapted) Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started