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Long-term Contracts Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it has one performance obligation which is satisfied over
Long-term Contracts
Clorad Corp. contracts with a customer to construct a building. It appropriately determines that it has one performance obligation which is satisfied over time. Using the following information for Year 1, compute Clorad's (a) total estimated costs for the contract, (b) revenue to date, and (c) gross profit recognized.
| Year 1 (of 4-year project): | |
| Construction costs incurred during the year | $174,000 |
| Estimated costs to complete the contract | 426,000 |
| Partial billings to customers | 100,000 |
| Collections from customers | 25,000 |
| Total contract price | 1,000,000 |
| (a) Total estimated costs for the contract | |
| (b) Revenue to date | |
| (c) Gross profit recognized |
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