Using the percentage-of-completion method, calculate the percentage complete for each year of the contract. (Round answers to O decimal places, eg. 52%)
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- On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?Blossom Enterprises Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd. The contract is a non-cancellable fixed price contract for $10.0 million. The following data pertain to the construction period (all figures in thousands). Costs for the year Estimated costs to complete Progress billings for the year (non-refundable) Cash collected for the year Gross profit/(loss) $ eTextbook and Media List of Accounts Account Titles and Explanation (To record cost of construction) The construction industry has experienced significant expansion, making construction materials and labour more costly than originally estimated. Blossom finds it extremely difficult to estimate the costs to complete construction and therefore difficult to estimate the percent complete. It must account for the construction project using the zero-profit method. (To record progress billings) Calculate the amount of the gross profit to be recognized each year of…Oriole Enterprises Ltd. has entered into a contract beginning in February 2023 to build two warehouses for Whispering Winds Structures Ltd. The contract is a non-cancellable fixed-price contract for $9.7 million. The following data pertain to the construction period (all figures in thousands). Costs for the year Estimated costs to complete Progress billings for the year (non-refundable) Cash collected for the year (a) Your answer is incorrect. Percent complete 2023 2023 0 2024 $3,420 4,180 3,095 3,605 3,000 2,725 3,655 3,320 % 2025 Using the percentage-of-completion method, calculate the percentage complete for each year of the contract. (Round answers to O decimal places, e.g. 52%.) 4,180 1,800 1,900 -0- 2024 % 2025 100 %
- On February 1, 2023, Sandhill Contractors agreed to construct a building at a contract price of $3,460,000. The total estimated construction costs would be $1,890,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 Gross profit/ (loss) 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 $ 2,365,000 913,000 1,890,000 1,750,000 2025 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentage complete to 1 decimal place, e.g. 15.2% and final answers to O decimal places, e.g. 5,125.) 2024 -0- 3,460,000 2,950,000 -107450 $ LA 2025 40450A&B Construction enters into a contract to construct a bridge for $1,400,000. At the outset, A&B estimates that it will cost $1,200,000 to build the bridge. Actual costs in 2017 are $540,000. Actual costs in 2018 are less than expected and amount to $600,000. The profits reported under the completed contract and percent of completion methods for each year would be: Select one: Completed Contract Percentage of Completion ○ a. 2017 2018 2017 2018 $0 $200,000 $90,000 $170,000 O b. Completed Contract Percentage of Completion 2017 2018 2017 2018 $0 $260,000 $90,000 $170,000 Completed Contract Percentage of Completion 2017 2018 2017 $0 $260,000 $123,000 2018 $197,000 ○ d. Completed Contract Percentage of Completion 2017 2018 2017 $0 $260,000 $90,000 2018 $110,000In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2024 $ 135 Cash collected on project during 2024 $ 105 Construction in progress, 12/31/2024 $ 207 Estimated percentage of completion during 2024 60% What were the construction billings by CCC during 2024?
- In 2018, Long Construction Corporation began construction work under a three-year contract. The contract priceis $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reportingpurposes. The financial statement presentation relating to this contract at December 31, 2018, is as follows:Balance SheetAccounts receivable (from construction progress billings) $30,000Construction in progress $100,000 Less: Billings on construction contract (94,000)Cost and profit of uncompleted contracts in excess of billings 6,000Income StatementIncome (before tax) on the contract recognized in 2018 $20,000Required:1. What was the cost of construction actually incurred in 2018?Sheridan Construction Company has entered into a contract beginning January 1, 2025, to build a parking complex. It has been estimated that the complex will cost $596,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $902,000. The following data pertain to the construction period. Costs to date Estimated costs to complete Progress billings to date Cash collected to date (a) $256,280 339,720 270,000 Gross profit recognized in 2025 Gross profit recognized in 2026 2025 Sok and Media 240,000 Gross profit recognized in 2027 $ GA $ LA 2026 Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter O. Do not leave any fields blank.) 5 $429,120 166,880 555,000 505,000 2027 $606,000 902,000 902.000In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2024 $ 135 Cash collected on project during 2024 $ 105 Construction in progress, 12/31/2024 $ 207 Estimated percentage of completion during 2024 60% What are CCC's estimated remaining construction costs on the project at the end of 2024?
- How much is the Gross Profit/Loss Realized in 2018? Celestial Holdings Co. began constructing a condominium on January 1, 2017 for a contract price of P1,250,000. The entity has assured collection of its contract and the costs can be reliably estimated. For the year ended December 31, 2018, Celestial billed its client an additional 60% of the contract price. Data relating to the construction are as follows: 2017 2018 2019 Construction in Progress Estimated Cost to Complete 300,000 Cost Incurred 250,000 600,000 112,500 Excess of CIP over PB 25,000 (125,000)Rogers Ltd. has entered into a contract beginning in February 2020 to build two warehouses for ocean Ltd. The contract is a non-cancellable fixed price contract for $9.4 million. The following data pertain to the construction period. 2020 2021 2022 Costs for the year $3,285,000 4,015,000 1,800,000 Estimated costs to complete 4,015,000 1,825,000 -0- Progress billings for the year (non-refundable) 2,960,000 3,440,000 3,000,000 Cash collected for the year 2,605,000 3,490,000 3,305,000 a) Using the percentage-of-completion method, calculate the percent complete for each year of the contract. b) Calculate the amount of the gross profit to be recognized each year of the contract. c) Prepare the journal entries for 2020 and 2021. (Use Materials, Cash, Payables for costs incurred to date.) d) What is the balance in the Contract Asset/Liability account at December 31, 2020 and 2021? Show how the construction contract would be reported on the SFP…Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at…