Question
Constructing and Assessing Income Statements Using Cost-to-Cost Method Assume GE Hitachi Nuclear Energy agreed in May 2019 to construct a nuclear generator for NSTAR, a
Constructing and Assessing Income Statements Using Cost-to-Cost Method Assume GE Hitachi Nuclear Energy agreed in May 2019 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. GE Hitachi estimated that its construction costs would be $600 million. The contract price of $750 million is to be paid as follows: $250 million at the time of signing; $250 million on December 31, 2019; and $250 million at completion in May 2020. GE Hitachi Nuclear Energy incurred the following costs in constructing the generator: $240 million in 2019 and $360 million in 2020.
a. Compute the amount of GE Hitachi's revenue, expense, and income for both 2019 and 2020, and for both years combined, under the cost-to-cost revenue recognition method. Enter dollar amounts in millions.
Cost-to-Cost Method | ||||
Year | Cost Incurred | % of total expected costs | Revenue Recognition | Income |
2019 | $ Answer | Answer % | $ Answer | $ Answer |
2020 | Answer | Answer % | Answer | Answer |
Total | $ Answer |
| $ Answer | $ Answer |
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