Answered step by step
Verified Expert Solution
Question
1 Approved Answer
48. Income recognition for a contractor. On October 15, 2010, Flanikin Construction Company contracted to build a shopping center at a contract price of $180
48. Income recognition for a contractor. On October 15, 2010, Flanikin Construction Company contracted to build a shopping center at a contract price of $180 million. The schedule of expected and actual cash collections and contract costs is as follows: Cash Collections Estimated and Year from Customers Actual Cost Incurred $ 36,000,000 2010 12,000,000 2011 45,000,000 36,000,000 2012 45,000,000 48,000,000 54,000,000 2013. 24,000,000 $180,000,000 $120,000,000 a. Calculate the amount of revenue, expense, and net income for each of the four years under the following revenue recognition methods: (1) Percentage-of-completion method (2) Completed contract method. b. Show the journal entries Flanikin will make in 2010, 2011, 2012, and 2013 for this con tract. Flanikin accumulates contract costs in a Contract in Process account. Although the costs involve a mixture of cash payments, credits to assets, and credits to liability accounts, assume for purposes of this problem that all costs are recorded as credits to Accounts Payable c. Which method do you believe provides the better measure of Flanikin Construction Company's performance under the contract? Why
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