Citation Builders, Incorporated, builds offce buildings and single-family homes. The office buidings are constructed under contract with reputable buryers 3 The homes are constructed in developments ranging from 1020 homes and are typically sold during construction of soon after. To secure the home uport completion, buyers must pay a deposit of 10% of the price of the home with the remaining balance due upon completion of the house and transfef of title. Failure to pay the full amount results in forfeiture of the down payment. Occasionaly, homes remain unsold for as long as three months after construction in these situations, sales price reductions are used to promote the saie. During 2024. Ctation began construction of an offic building for Aftamont Corporation. The total contract price is $20 million. Costs incurred, estimated cokts to complete at year end, billings, ond cash colections for the life of the contract are as follows. Also during 2024, Citation began a development consisting of 12 identical homes. Citation estimated that each home will sell for $600,000, but individual sales prices are negotiated with buryers. Deposits were fecelved for eight of the homes, three of which were completed during 2024 and paid for in ful for $600.000 each by the buyers. The completed homes cost $450.000 each to construct. The construction costs incurred during 2024 for theinine uncompleted homes totaled $2,700,000. Requlred: 1 1. Which method is most equivalent to recognizing revenue at the point of deivery? 2. Answer the following questions, assuming that Citation concludes it does not qualify for revenue recognition over time for its office. builiding contracts: 2-a. How much revenue related to this corritract will Citation report in its 2024 and 2025 income statements? 2b. What is the amount of gross profit or loss to be recognized for the Axamort contract during 2024 and 2025 ? 2-c. What wili Cnation report ia its December 31,2024 , balance sheet related to this contract?pgnore cashy) 3. Answer the follgwing questions assuming that citation recognizes revenue over time according to percentage of completion for its office bullding contracts. 3-a. How much revenue related to this contract will Citation report in its 2024 and 2025 income statements? 3-b. What is the amount of gross plofit of loss to be recognized for the Altamont contract during 2024 and 2025 ? 3-. What wili Citation report in its December 31, 2024, balance sheet related to this contract? (jonore cash) 4. Assume the same information for 2024 and 2025 , but that as of yearend 2025 the estimated cost to complete the office building is $9,000,000. Ceation-recognizes revenue over time according to percentage of completion for its otfice bulding contracts. 4.a. How much revenue related to this contract wit Citation report in the 2025 income statement? 4-b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2025 ? 4-c. What will Citation report in is 2025 balance sheet related to this contract?lgnore cash) 5. Which method of accounting should Ciation Builders, Incorporated adopt for its single-family houses? o: What wil Citatiorreport in its 2024 income stptement and 2024 balance shect related to the single family home business fignore cash in the baldnce sheet? Complete this question by entering vour baswers in the tabs bellow
