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On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $270 million. The expected

On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $270 million. The expected completion date is April 1, 2023, just in time for the 2023 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):

2021 2022 2023
Costs incurred during the year $ 50 $ 100 $ 60
Estimated costs to complete as of December 31 150 90

Required: 1. Compute the revenue and gross profit will Sanderson report in its 2021, 2022, and 2023 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 2021, 2022, and 2023 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 2022 are $100 million instead of $90 million. Compute the amount of revenue and gross profit or loss to be recognized in 2022 assuming Sanderson recognizes revenue over time according to percentage of completion.

Compute the revenue and gross profit will Sanderson report in its 2021, 2022, and 2023 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.)

Percentages of completion
Choose numerator Choose denominator = % complete to date
2021 =
2022 =
2023
2021
To date Recognized in prior years Recognized in 2021
Construction revenue
Construction expense
Gross profit (loss)
2022
To date Recognized in prior years Recognized in 2022
Construction revenue
Construction expense
Gross profit (loss)
2023
To date Recognized in prior years Recognized in 2023
Construction revenue
Construction expense
Gross profit (loss)

Compute the revenue and gross profit will Sanderson report in its 2021, 2022, and 2023 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.)

Year Revenue recognized Gross Profit (Loss) recognized
2021 million million
2022 million million
2023 million million

Suppose the estimated costs to complete at the end of 2022 are $100 million instead of $90 million. Compute the amount of revenue and gross profit or loss to be recognized in 2022 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
2022 =
2022
To date Recognized in prior Years Recognized in 2022
Construction revenue
Construction expense
Gross profit (loss)
  • Required 2

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