Question
Rice Contractors began a contract to build a new student union on the Southern State University campus during Year 1 for $910,000. Information concerning the
Rice Contractors began a contract to build a new student union on the Southern State University campus during Year 1 for $910,000. Information concerning the project follows:
Year 1
% work completed: 25%
Cost Incurred: 172,000
Progress Billings: 160,000
Cash Collected: 130,000
Year 2
% work completed: 35%
Cost Incurred: 248,000
Progress Billings: 360,000
Cash Collected: 340,000
Year 3
% work completed: 40%
Cost Incurred: 180,000
Progress Billings: 380,000
Cash Collected: 430,000
1) At the end of Year 1, how much is the balance of the asset accountProduction-in-Progressif Rice Contactors uses the completed contract method?
2) How much revenue should Rice recognize during Year 1 if Rice uses the completed contract method?
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