Exercise $6-19($Algo$)$ Long$-$term contract; revenue recognition over time and at a point in time $[$LO$6-9]$

Assume Avaya contracted to provide a customer with Internet infrastructure for $$2,150,000.$ The project began in $2024$ and was completed in $2025.$ Data relating to the contract are summarized below:

$20242025$

Costs incurred during the year $ $312,000$ $ $1,635,000$

Estimated costs to complete as of $12/311,248,0000$

Billings during the year $395,0001,650,000$

Cash collections during the year $280,0001,765,000$

Required:

Compute the amount of revenue and gross profit or loss to be recognized in $2024$ and $2025,$ assuming Avaya recognizes revenue over time according to percentage of completion.

Compute the amount of revenue and gross profit or loss to be recognized in $2024$ and $2025,$ 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 $2024,$ assuming Avaya recognizes revenue over time according to percentage of completion.

Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of $2024,$ assuming this project does not qualify for revenue recognition over time.