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On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington D.C., for $320 million. The expected
On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington D.C., for $320 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2018 $ 60 180 Costs incurred during the year Estimated costs to complete as of December 31 2019 $120 70 2020 $50 Required: 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019 and 2020 income statements related to this contrac 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 contrac 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 $70 million Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. Required 1 Required 2 Required 3 Suppose the estimated costs to complete at the end of 2019 are $120 million instead of $70 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 numerator Choose denominator + % complete to date 2019 0 2019 Recognized in prior Years To date Recognized in 2019 $ 0 Construction revenue Construction expense Gross profit (loss) $ 0 $ 0
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