Question 2

Free Form Builders Inc., a construction company, recognizes revenue from its long-term

contracts using the percentage-of-completion method. On March 29, 2013, the company

signed a contract to construct a building for $500,000. The company estimated that it would

take four years to complete the contract and estimated the cost to the company at $325,000.

The expected costs in each of the four years are as follows:

Year Cost

2013 $110,750

2014 $100,500

2015 $ 84,250

2016 $ 29,500

Total $325,000

On December 31, 2014, the date Free Form closes its books (the books have not been closed yet),

the company revised its estimates for the costs in 2015 and 2016. It estimated that it would cost

$200,000 in 2015 and $100,000 in 2016 to complete the contract.

Required:

Compute the revenue, expense, and profit/loss for each of the four years. Assume that actual costs

incurred were the same as expected/estimated/revised costs.

Question 3

The following information relates to the held-for-trading investments (?HFTI?) of Anders Corp.

Acquisition Acquisition Date Selling Market Value Dec. 31

Security Date Cost Sold Price 2012 2013 2014

Alpha Apr. 13, 2012 $ 70,000 NA NA $68,000 $72,000 $69,000

Beta Aug. 24, 2012 45,000 May 27, 2013 52,000 48,000 NA NA

Delta Jan. 8, 2013 35,000 NA NA NA 38,000 41,000

Omega Jan. 3, 2014 95,000 June 30, 2014 98,000 NA NA NA

The Anders Corp. closes its books on December 31 each year.

[?NA? means not applicable.]

Required:

a. Prepare journal entries relating to these held-for-trading investments for each year. (There

are NO brokerage fees.)

b. Show how the information regarding held-for-trading investments would be presented on

the income statement and balance sheet for each year.

293 - ASSIGNMENT #3 Question 1 Problem P7-8 Question 2 Free Form Builders Inc., a construction company, recognizes revenue from its long-term contracts using the percentage-of-completion method. On March 29, 2013, the company signed a contract to construct a building for $500,000. The company estimated that it would take four years to complete the contract and estimated the cost to the company at $325,000. The expected costs in each of the four years are as follows: Year Cost 2013 $110,750 2014 $100,500 2015 $ 84,250 2016 $ 29,500 Total $325,000 On December 31, 2014, the date Free Form closes its books (the books have not been closed yet), the company revised its estimates for the costs in 2015 and 2016. It estimated that it would cost $200,000 in 2015 and $100,000 in 2016 to complete the contract. Required: Compute the revenue, expense, and profit/loss for each of the four years. Assume that actual costs incurred were the same as expected/estimated/revised costs. Question 3 The following information relates to the held-for-trading investments (\"HFTI\") of Anders Corp. Security Acquisition Date Acquisition Cost Alpha Beta Delta Omega Apr. 13, 2012 $ 70,000 Aug. 24, 2012 45,000 Jan. 8, 2013 35,000 Jan. 3, 2014 95,000 Date Sold NA May 27, 2013 NA June 30, 2014 Selling Price NA 52,000 NA 98,000 Market Value Dec. 31 2012 2013 2014 $68,000 48,000 NA NA $72,000 NA 38,000 NA $69,000 NA 41,000 NA The Anders Corp. closes its books on December 31 each year. [\"NA\" means not applicable.] Required: a. Prepare journal entries relating to these held-for-trading investments for each year. (There are NO brokerage fees.) b. Show how the information regarding held-for-trading investments would be presented on the income statement and balance sheet for each year. THE TEMPLATE FOR SUBMITTING YOUR ASSIGNMENT STARTS ON THE NEXT PAGE. ONLY HAND-IN THE PAGES STARTING WITH \"NAME\". 293ASSIGNMENT #3 NAME(Last,First): ________________________ STUDENT NO: _______________________ P7-8 Req. 1 Req. 2 Entry to record write-off of accounts receivable: Entry to record bad debt expense for 2015: Show your work in the space below the journal entry. Req. 3 Vital Inc. Partial Statement of Financial Position As at December 31, 2015 Current Assets .... Balance of ADA = Req. 4 Question 2 Percentage-of-completion method Year 2013 Calculations Revenue 2014 2015 2016 TOTALS Expense Profit Question 3 Debit Credit 2012 April 13 August 24 December 31 2013 January 8 May 27 December 31 2014 January 3 June 30 December 31 b) Income Statement: 2012 2013 2014 2012 2013 2014 Realized gain (loss) on sale of HFTI Unrealized gain (loss) from change in market value of HFTI Balance Sheet: Held-for-Trading investments (\"HFTI\") (at ____________________________________________)