Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project and the requirements for recognizing revenue

Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project and the requirements for recognizing revenue over time are met. The total estimated cost of the project is $4,000,000 and the following information is available:

($ in thousands)Year 1Year 2Year 3
Costs incurred$1,000$1,500$1,250
Estimated completion costs$3,000$1,500$0
Billings$750$1,750$2,500
Cash collected$500$1,500$3,000

Using revenue recognition standards prior to ASC Topic 606, which one of the following entries would be made in Year 3 to record the completion and acceptance of the project using the completed-contract method of revenue recognition?

Multiple Choice

DR Inventory: Construction in progress $3,750,000 DR Income on long-term construction contract $1,250,000 CR Billings on construction in progress $5,000,000

DR Billings on construction in progress $1,250,000 CR Inventory: Construction in progress $1,250,000

DR Billings on construction in progress $5,000,000 CR Inventory: Construction in progress $3,750,000 CR Income on long-term construction contract $1,250,000

DR Inventory: Construction in progress $5,000,000 CR Billings on construction in progress $5,000,000


Step by Step Solution

3.50 Rating (143 Votes )

There are 3 Steps involved in it

Step: 1

Estimated total cost 4000 in years 1 and 2 ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quantitative Methods For Business

Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey Cam

11th Edition

978-0324651812, 324651813, 978-0324651751

More Books

Students also viewed these Corporate Finance questions

Question

How are the square numbers embedded in Pascals triangle?

Answered: 1 week ago