Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,250,000. 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	$	320,000		$	1,720,000
Estimated costs to complete as of 12/31		1,280,000			0
Billings during the year		405,000			1,670,000
Cash collections during the year		260,000			1,775,000

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.

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. (Loss amounts should be indicated with a minus sign. Use percentages as calculated and rounded in the table below to arrive at your final answer.)

Required 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. (Loss amounts should be indicated with a minus sign.)

Required 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.

Required 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.

Percentages of completion Choose numerator | | Choose denominator % complete to date Actual costs to date Estimated total costs 2018 320,000+ 0 2019 0 2018 To date Recognized in prior years Recognized in 2018 Construction revenue Construction expense Gross profit (loss) To date Recognized in prior years Recognized in 2019 Construction revenue Construction expense Gross profit (loss) 0 0 0 Gross Profit (Loss) Revenue 2018 2019 Balance Sheet (Partial) At December 31, 2018 Current assets: Current liabilities: Balance Sheet (Partial) At December 31, 2018 Current assets: Current liabilities