Question
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows:
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Cost incurred during the year | $ 2,400,000 | $ 3,600,000 | $ 2,200,000 |
| Estimated costs to complete as of year-end | 5,600,000 | 2,000,000 | 0 |
| Billings during the year | 2,000,000 | 4,000,000 | 4,000,000 |
| Cash collections during the year | 1,800,000 | 3,600,000 | 4,600,000 |
Westgate recognizes revenue over time according to percentage of completion.
Problem 6-10 (Static) Part 5
5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming the following costs incurred and costs to complete information.
Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.
| 2024 | 2025 | 2026 | |
|---|---|---|---|
| Costs incurred during the year | $ 2,400,000 | $ 3,800,000 | $ 3,900,000 |
| Estimated costs to complete as of year-end | 5,600,000 | 4,100,000 | 0 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the revenue and gross profit or loss for each year according to the percentage of completion method we will follow these steps Step 1 Cal...
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Financial Accounting In An Economic Context
Authors: Jamie Pratt
7th Edition
0470128828, 978-0470128824
