Question
Supplier Corp. enters into a government contract during the year to provide computer equipment for $1,600,000. The contract consists of a single performance obligation to
Supplier Corp. enters into a government contract during the year to provide computer equipment for $1,600,000. The contract consists of a single performance obligation to provide specified equipment in three years. Total costs estimated by Supplier Corp. for the contract are $1,120,000 . The equipment is highly specialized and has no alternative uses. As negotiated in the contract, any costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp. in the event of a contract cancellation. Actual costs incurred during the year were $512,000 including unexpected cost overruns of $64,000 due to labor inefficiencies. a. Would revenue be recognized over time or at a point in time for this contract? AnswerRecognize revenue over timeRecognize revenue at a point in time b. Calculate (1) recognized revenue, (2) the gross profit, and (3) adjusted contract margin to be recorded during the year.
1. Recognized revenue | Answer |
2. Gross profit | Answer |
3. Adjusted contract margin | Answer |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started