Question
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows:
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Cost incurred during the year | $ 2,400,000 | $ 3,600,000 | $ 2,200,000 |
| Estimated costs to complete as of year-end | 5,600,000 | 2,000,000 | 0 |
| Billings during the year | 2,000,000 | 4,000,000 | 4,000,000 |
| Cash collections during the year | 1,800,000 | 3,600,000 | 4,600,000 |
Westgate recognizes revenue over time according to percentage of completion.
5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming the following costs incurred and costs to complete information.
Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Costs incurred during the year | $ 2,400,000 | $ 3,800,000 | $ 3,900,000 |
| Estimated costs to complete as of year-end | 5,600,000 | 4,100,000 | 0 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting Theory
Authors: Craig Deegan, H. Bierman
4th Edition
0071013148, 978-0071013147
