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On June 15, 2016, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $390 million. The expected
On June 15, 2016, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $390 million. The expected completion date is April 1, 2018, just in time for the 2018 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows (S in millions) 2016 2017 2018 Costs incurred during the year Estimated costs to complete as of December 31 $ 60 $130 $70 190 60 Required 1. Compute the revenue and gross profit will Sanderson report in its 2016, 2017, and 2018 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. (Enter your answers in million. Use percentages as calculated and rounded in the table below to arrive at your final answer. Losses and expenses should be indicated with a minus sign.) 2016 2017 2018 Estimated total gross profit (loss) Actual total gross profit (loss) Percentages of completion Choose numerator | + | Choose denominator-1 % complete to date 2016 2017 2018 0 0 100.00% 2016 Recognized in Recognized in To date prior years 2016 Construction revenue Construction expense Gross profit (loss) 0 0 0 2017 Recognized in Recognized in To date prior years 2017 Construction revenue Construction expense Gross profit (loss) 0 0 0 2018 Recognized in Recognized in To date prior years 2018 Construction revenue Construction expense Gross profit (loss) 0 0 0 2. Compute the amount of revenue and gross profit or loss to be recognized in 2016, 2017, and 2018 using the completed contract method. (Enter your answers in millions.) Revenue recognized Gross Profit (Loss) recognized Year 2016 2017 2018 million million million million million million 3. Suppose the estimated costs to complete at the end of 2017 are $190 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2017 using the percentage of completion method. (Do not round intermediate calculations. Enter your answer in millions Round your answers to 1 decimal place. Losses and expenses should be indicated with a minus sign.) 2017 Estimated total gross loss Percentages of completion Choose denominator-% complete to date Choose numerator | + | 2017 2017 Recognized in prior Years Recognized in 2017 Construction revenue Construction expense Gross profit (loss)
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