Long Term Contract

In 2021, 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 2023. Information related to the contract is as follows

(in millions)

202120222023

Cost incurred during the year 2,400,0003,800,0002,200,000

Estimated costs to complete

as of December 31 5,600,0002,000,0000

1.Determine how much revenue and gross profit Westgate will report in its 2021, 2022, and 2023 income statement assuming Westgate recognized revenue over time according to percentage of completion.

2.Determine how much revenue and gross profit Westgate will report in its 2021, 2022, and 2023 income statement assuming Westgate does not qualify to recognized revenue over time.