Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Swallow Corp. has a contract to construct a $5,000,000 cruise ship at an estimated cost of $4,000,000. The company will begin construction of the cruise

Swallow Corp. has a contract to construct a $5,000,000 cruise ship at an estimated cost of $4,000,000. The company will begin construction of the cruise ship in early January 2011 and expects to complete the project sometime in late 2014. Swallow Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances, Swallow Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Swallow Corp. expects to recover all its costs under the contract. During 2011 and 2012, the company has the following activity:

2011

2012

Costs to date

980,000$

$2,040,000

Estimated costs to complete

3,020,000

1,960,000

Progress billings during the year

1,000,000

1,000,000

Cash collected during the year

648,000

1,280,000

For the year ended December 31, 2012, how much revenue should Swallow Corp. recognize on its income statement?

  1. $980,000.
  2. $2,040,000.
  3. $1,300,000.
  4. $1,060,000.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Managerial Accounting Creating Value In A Dynamic Business Environment

Authors: Ronald W. Hilton, David Platt

13th Edition

1265046794, 9781265046798

More Books

Students also viewed these Accounting questions

Question

3. Where is the job to be accomplished?

Answered: 1 week ago