Question
OConners Company began operations on January 1, 2017. During the year, OConners entered into a non-cancellable contract with Motley Corp. to construct a manufacturing facility.
OConners Company began operations on January 1, 2017. During the year, OConners entered into a non-cancellable contract with Motley Corp. to construct a manufacturing facility. At that time, OConners estimated that it would take five years to complete the facility at a total cost of $4,140,000. The total contract price for construction of the facility is $5,520,000. During the year, OConners incurred $1,090,936 in construction costs related to the construction project. The estimated cost to complete the contract is $3,867,864. Motley Corp. was billed and paid 25% of the contract price. The billings are non-refundable. Prepare schedules to calculate the amount of gross profit to be recognized for the year ended December 31, 2017, and the amount to be shown as contract assets or liabilities at December 31, 2017, under each of the following methods
Completed-contract method.
OConners Company
Computation of Contract Liability
Year Ended December 31, 2017
Here are the choices that could be used on the boxes above as anwers.
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