Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $310 million. The expected

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $310 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($in millions): 2018 2019 2020 Costs incurred during the year Estimated costs to complete $ 70 $60 $30 as of December 31 130 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. Percentages of completion Choose numerator Choose denominator % complete to date 2018 2019 2020 100.00% 2018 Recognized in 2018 To date Recognized in prior years $ Construction revenue 0 Construction expense Gross profit (loss) $ 0 2019 Recognized in 2019 To date Recognized in prior years $ Construction revenue 0 Construction expense $ Gross profit (loss) $ 0 2020 To date Recognized in prior years Recognized in 2020 $ Construction revenue Construction expense S Gross profit (loss) 0 Required 1 Required 2 C O Required 1 Required 2 Required 3 Compute the revenue and gross profit will Sanders contract assuming this project does not qualify for amounts should be indicated with a minus sign.) Revenue Gross Profit (Loss) recognized Year recognized 2018 million million million 2019 million million million 2020 Required 1 Required 2 Required 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. (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 To date Recognized in prior Years Recognized in 2019 Construction revenue 0 $ Construction expense 0 S 0 Gross profit (loss) KRequired 2 Required 3>

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internal Auditing Assurance & Advisory Services

Authors: Urton L. Anderson, Michael J. Head, Sridhar Ramamoorti, Cris Riddle, Mark Salamasick, Paul J. Sobel

4th Edition

0894139878, 978-0894139871

More Books

Students also viewed these Accounting questions

Question

What lifestyle traits does your key public have?

Answered: 1 week ago