On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $250 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): Costs incurred during the year Estimated costs to complete as of December 31 2018 $80 120 2019 2020 $40 $30 30 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 $120 million instead of $30 million Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. Complete this question by entering your answers in the tabs below. Required 1 Required 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 Sanderson recognizes revenue over time according to percentage of completion. (Enter your answers in millions. Loss amounts should be indicated with a minus sign. Use percentages as calculated and rounded in the table below to arrive at your final answer.) Show less complete to date Percentages of completion Choose Choose numerator denominator Actual costs to Estimated total dato costs 80 200 150 - 2018 40 00% 100.00% 2019 150 % complete to date Percentages of completion Choose Choose numerator denominator Actual costs to Estimated total date costs $ 80 + 200 150 X - 150 40.00% 2018 2019 2020 100.00% 100.00% To date Recognized in 2018 S 2018 Recognized in prior years 100S 80 $ 20 $ 0 $ Construction revenue Construction expense Gross profit (loss) 100 0 0 $ $ 80 20 $ To date 2019 Recognized in prior years $ 100 Recognized in 2019 200 100 Construction revenue Construction expense Gross profit (loss) 80 40 120 80 $ $ 20 $ 60 To date Recognized in 2020 Construction revenue Construction expense Gross nrofit (loss) 250 150 100 2020 Recognized in prior years $ 200 $ 120 S 80 $ Required 1 Required 2 Required 3 Compute the revenue and gross profit will Sanderson contract assuming this project does not qualify for rev amounts should be indicated with a minus sign.) Year 2018 2019 2020 $ $ $ Revenue recognized 67 million 102 million 101 million Gross Profit Loss) recognized $ 17 million $ 2X $ 41 million Required 1 Required 2 Required 3 Suppose the estimated costs to complete at the end of 2019 are $120 million instead of $30 mill revenue and gross profit or loss to be recognized in 2019 using the percentage of completion me millions. Use percentages as calculated and rounded in the table below to arrive at your final ang % complete to date Percentages of completion Choose Choose numerator denominator Actual costs to Estimated total date $ 150 X - S 250 costs 2019 60.00% 2019 Recognized in prior To date Recognized in 2019 Years 160 X $ 67 S 93 Construction revenue Construction expense Gross profit (loss) 152 X $ 102 50 X S 17 $ 12 X $
