Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below:

	2018			2019
Costs incurred during the year	$	300,000		$	1,575,000
Estimated costs to complete as of 12/31		1,200,000			0
Billings during the year		380,000			1,620,000
Cash collections during the year		250,000			1,750,000

Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 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 2018 assuming Nortel recognizes revenue over time according to percentage of completion.

Balance Sheet (Partial)
At December 31, 2018
Current assets:
Accounts receivable	130,000
Costs and profit in excess of billings	20,000
Current liabilities:

Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time.

Balance Sheet (Partial)
At December 31, 2018
Current assets:
Accounts receivable	$130,000
Current liabilities:
Billings in excess of costs	$80,000