Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021,...
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Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,420,000. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2021 At 12-31-2022 At 12-31-2023 Percentage of completion 10% 60% 100% Costs incurred to date $366,000 $2,814,000 $4,747,000 Estimated costs to complete 3,294,000 1,876,000 0 Billings to Axelrod, to date 727,000 2,310,000 4,420,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. Record Revenue when the project is done. (Cost Recovery Method) 2021 : Gross Profit / (Loss) = Price - (Cost Incurred to Date + Estimated Cost to Complete) Gross Profit / (Loss) = $4,420,000 - ($366,000+ $3,294,000) Gross Profit = $760,000 Gross Profit = $0 (Record Gross Profit when project is done) 2022: Gross Profit / (Loss) = Price - (Cost Incurred to Date + Estimated Cost to Complete) Gross Profit / (Loss) = $4,420,000 - ($2,814,000 + $1,876,000) (Loss) = ($270,000) 2023: Gross Profit/ (Loss) = Price (Cost Incurred to Date + Estimated Cost to Complete) Gross Profit / (Loss) = $4,420,000 ($4,747,000 + $0) (Loss) = ($327,000 ) - ( $270,000) Recorded 2022 (Loss) = ($57,000) 2023 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 2021: Gross Profit / (Loss) = Price (Cost Incurred to Date + Estimated Cost to Complete ) Gross Profit / (Loss) = $4,420,000 - ($366,000+ $3,294,000) Gross Profit = $760,000 Gross Profit = Gross Profit x Percentage of Completion Gross Profit = $760,000 x 10% Gross Profit = $76,000 2022: Gross Profit / (Loss) = Price - (Cost Incurred to Date + Estimated Cost to Complete ) Gross Profit/ (Loss) = $4,420,000 ($2,814,000+ $1,876,000) (Loss) ($270,000) (Loss) = ($270,000) x 60% (Loss) = ($162,000) - $76,000 (Year 2021) (Loss) = ($238,000) - 2022 2023: Gross Profit / (Loss) = Price (Cost Incurred to Date + Estimated Cost to Complete ) Gross Profit/ (Loss) = $4,420,000 - ($4,747,000+ $0) (Loss) = ($327,000) (Loss) = ($327,000) x 100% (Loss) ($327,000) - ($238,000) - $76,000 (Loss) = ($165,000) - 2023 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs. 2021 : Cost = Cost Incurred to Date +/- Gross Profit/(Loss) to Date Cost = $366,000 + $76,000 Cost = $442,000 Billings = $727,000 Excess = $727,000 - $442,000 = $285,000 Biilings in excess of cost = $285,000 2022: Cost = Cost Incurred to Date +/- Gross Profit/(Loss) to Date Cost = $2,814,000 - $162,000 Cost = $2,652,000 Billings = $2,310,000 Excess = $2,310,000 - $2,652,000 Cost in excess of billings = $342,000 1. Cost Recovery Method 2021 Gross Profit = $0 2022 Loss ($270,000) 2023 Loss = ($57,000) 2. Percentage of Completion 2021 Gross Profit = $76,000 2022 Loss ($238,000) 2023 Loss ($165,000) 3. 2021 Billings in excess of cost = $285,000 2022 Cost in excess of billings = $342,000 Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,480,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-31-2024 At 12-31-2025 At 12-31-2026 10% 60% 100% $ 367,000 3,303,000 728,000 $ 2,856,000 1,904,000 2,330,000 $ 4,818,000 0 4,480,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. Note: Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign. Show less Year Req 1 Gross Profit (Loss) Recognized ("Upon Completion") Req 2 Gross Profit (Loss) Recognized ("Over Time") 2024 $ 0 S $ 81,000 2025 $ (280,000) $ 2026 $ (58,000) $ Total project profit (loss) $ (338,000) $ (249,000) (170,000) (338,000) Req 1 and 2 Req 3 Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs. Balance Sheet (Partial) Current assets: 2024 2025 CIP in excess of billings Current liabilities: Billings in excess of CIP $ 280,000 $ 358,000 X < Req 1 and 2 Req 3 > Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,420,000. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2021 At 12-31-2022 At 12-31-2023 Percentage of completion 10% 60% 100% Costs incurred to date $366,000 $2,814,000 $4,747,000 Estimated costs to complete 3,294,000 1,876,000 0 Billings to Axelrod, to date 727,000 2,310,000 4,420,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. Record Revenue when the project is done. (Cost Recovery Method) 2021 : Gross Profit / (Loss) = Price - (Cost Incurred to Date + Estimated Cost to Complete) Gross Profit / (Loss) = $4,420,000 - ($366,000+ $3,294,000) Gross Profit = $760,000 Gross Profit = $0 (Record Gross Profit when project is done) 2022: Gross Profit / (Loss) = Price - (Cost Incurred to Date + Estimated Cost to Complete) Gross Profit / (Loss) = $4,420,000 - ($2,814,000 + $1,876,000) (Loss) = ($270,000) 2023: Gross Profit/ (Loss) = Price (Cost Incurred to Date + Estimated Cost to Complete) Gross Profit / (Loss) = $4,420,000 ($4,747,000 + $0) (Loss) = ($327,000 ) - ( $270,000) Recorded 2022 (Loss) = ($57,000) 2023 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 2021: Gross Profit / (Loss) = Price (Cost Incurred to Date + Estimated Cost to Complete ) Gross Profit / (Loss) = $4,420,000 - ($366,000+ $3,294,000) Gross Profit = $760,000 Gross Profit = Gross Profit x Percentage of Completion Gross Profit = $760,000 x 10% Gross Profit = $76,000 2022: Gross Profit / (Loss) = Price - (Cost Incurred to Date + Estimated Cost to Complete ) Gross Profit/ (Loss) = $4,420,000 ($2,814,000+ $1,876,000) (Loss) ($270,000) (Loss) = ($270,000) x 60% (Loss) = ($162,000) - $76,000 (Year 2021) (Loss) = ($238,000) - 2022 2023: Gross Profit / (Loss) = Price (Cost Incurred to Date + Estimated Cost to Complete ) Gross Profit/ (Loss) = $4,420,000 - ($4,747,000+ $0) (Loss) = ($327,000) (Loss) = ($327,000) x 100% (Loss) ($327,000) - ($238,000) - $76,000 (Loss) = ($165,000) - 2023 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs. 2021 : Cost = Cost Incurred to Date +/- Gross Profit/(Loss) to Date Cost = $366,000 + $76,000 Cost = $442,000 Billings = $727,000 Excess = $727,000 - $442,000 = $285,000 Biilings in excess of cost = $285,000 2022: Cost = Cost Incurred to Date +/- Gross Profit/(Loss) to Date Cost = $2,814,000 - $162,000 Cost = $2,652,000 Billings = $2,310,000 Excess = $2,310,000 - $2,652,000 Cost in excess of billings = $342,000 1. Cost Recovery Method 2021 Gross Profit = $0 2022 Loss ($270,000) 2023 Loss = ($57,000) 2. Percentage of Completion 2021 Gross Profit = $76,000 2022 Loss ($238,000) 2023 Loss ($165,000) 3. 2021 Billings in excess of cost = $285,000 2022 Cost in excess of billings = $342,000 Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,480,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-31-2024 At 12-31-2025 At 12-31-2026 10% 60% 100% $ 367,000 3,303,000 728,000 $ 2,856,000 1,904,000 2,330,000 $ 4,818,000 0 4,480,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. Note: Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign. Show less Year Req 1 Gross Profit (Loss) Recognized ("Upon Completion") Req 2 Gross Profit (Loss) Recognized ("Over Time") 2024 $ 0 S $ 81,000 2025 $ (280,000) $ 2026 $ (58,000) $ Total project profit (loss) $ (338,000) $ (249,000) (170,000) (338,000) Req 1 and 2 Req 3 Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs. Balance Sheet (Partial) Current assets: 2024 2025 CIP in excess of billings Current liabilities: Billings in excess of CIP $ 280,000 $ 358,000 X < Req 1 and 2 Req 3 >
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Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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