Assume Avaya contracted to provide a customer with Internet infrastructure for $$2,050,000.$ The project began in $2024$ and was completed in $2025.$ Data relating to the contract are summarized below:

$20242025$

Costs incurred during the year $ $304,000$ $ $1,595,000$

Estimated costs to complete as of $12/311,216,0000$

Billings during the year $385,0001,630,000$

Cash collections during the year $260,0001,755,000$

Required:

Compute the amount of revenue and gross profit or loss to be recognized in $2024$ and $2025,$ assuming Avaya recognizes revenue over time according to percentage of completion.

Compute the amount of revenue and gross profit or loss to be recognized in $2024$ and $2025,$ assuming this project does not qualify for revenue recognition over time.

Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of $2024,$ assuming Avaya recognizes revenue over time according to percentage of completion.

Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of $2024,$ assuming this project does not qualify for revenue recognition over time.