On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $410 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows (S in millions): inated costs to cgmphete as of December 31 2018 2019 2020 $ 50 $150 $45 200 50- Estimated costs to complete as of December 31 Required: 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. 2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time 3. Suppose the estimated costs to complete at the end of 2019 are $200 million instead of $50 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. Percentages of completion Choose denominator Estimated total costs % complete to date Choose numerator+ Actual costs to date 2018 20.00% 80.00% 100.00% 50 +$ 250- 200 > 250 2020 Recognized in prior ears To date Construction revenue Construction expense Gross profit (loss)S 82S 50S 32S Recognized in 2018 82 50 32 2019 Recognized in priorRecognized in 2019 246 150 96 To date years Construction revenue Construction expense Gross profit (loss) 328 S 200 S 128 S 32S Recognited in prior Recognized in 2020 328S To date years Construction revenue Construction expense Gross profit (loss) (246) 128 Required 1Required 2 Required 3 Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time. (Enter your answers in millions. Loss amounts should be indicated with a minus sign.) Revenue recognized Gross Profit (Loss) recognized Year 2018 S 2019 million S 0 million 2020 410milon 16million 0million Umillion Suppose the estimated costs to complete at the end of 2019 are $200 million instead of $50 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. (Enter your answers in millions. Use percentages as calculated and rounded in the table below to arrive at your final answer.) Percentages of completion Choose denominator % complete to date Choose numerator | 2019 200S 62.50% 2019 Recognized in prior Years To date Recognized in 2019 Construction revenue Construction expense 91 (150) (59) (200) e $ (50) 01$ Gross profit (loss)S
