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 | $ 2,184,000 | $ 3,510,000 | $ 2,316,600 |
| Estimated costs to complete as of year-end | 5,616,000 | 2,106,000 | 0 |
| Billings during the year | 2,120,000 | 3,574,000 | 4,306,000 |
| Cash collections during the year | 1,860,000 | 3,400,000 | 4,740,000 |
Westgate recognizes revenue over time according to percentage of completion.
Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
Note: Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.
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Auditing A Business Risk Approach
Authors: Larry E. Rittenberg, Karla Johnstone, Audrey Gramling
7th Edition
0324663722, 978-0324663723
