Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 11P
1.a
To determine
State the amount appeared in the financial statements for 2020 under successful-efforts method.
1.b
To determine
State the amount appeared in the financial statements for 2020 under full-cost method.
2.
To determine
State the reason for which the some company’s especially, smaller ones prefer the full-cost method.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
Complete this question by entering your answers in the tabs below.
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…
Casio Co. recognizes construction revenue and expenses using the percentage-of-completion method. During 2023, a single long-term project was begun, which continued through 2025. Information on the project follows: 2023 $100,000 2024 $300,000 12/31 Accounts Receivable balance 125,000 162,000 Construction expenses for year Gross Profit recognized in year Billings during year 52,000 100,000 100,000 420,000 The 12/31/24 CIP balance is: Select one: a.$139,000 b.$452,000 c.$187,000 d.$152,000 e.$439,000
Suppose a company spends $100,000 on research and development in 2021. As a result of the products developed, additional revenue is generated over the next five years totaling $600,000. When is the cost of the research and development in 2021 recognized as an expense?
Multiple Choice
Evenly over the period 2022-2026.
Full amount in 2026.
Evenly over the period 2021-2025.
Full amount in 2021.
Chapter 10 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 10 - Prob. 1GICh. 10 - Prob. 2GICh. 10 - What is the relationship between the book value...Ch. 10 - Prob. 4GICh. 10 - Prob. 5GICh. 10 - Prob. 6GICh. 10 - What are asset retirement obligations? How should...Ch. 10 - Prob. 8GICh. 10 - Prob. 9GICh. 10 - Prob. 10GI
Ch. 10 - At what amount does a company record the cost of a...Ch. 10 - Prob. 12GICh. 10 - Prob. 13GICh. 10 - Prob. 14GICh. 10 - Prob. 15GICh. 10 - Prob. 16GICh. 10 - Prob. 17GICh. 10 - What is the distinction between a capital and an...Ch. 10 - Distinguish between additions and...Ch. 10 - Distinguish between ordinary repairs and...Ch. 10 - Prob. 21GICh. 10 - Hickory Company made a lump-sum purchase of three...Ch. 10 - Prob. 2MCCh. 10 - Electro Corporation bought a new machine and...Ch. 10 - Prob. 4MCCh. 10 - Lyle Inc. purchased certain plant assets under a...Ch. 10 - Ashton Company exchanged a nonmonetary asset with...Ch. 10 - Prob. 7MCCh. 10 - Prob. 8MCCh. 10 - Prob. 9MCCh. 10 - Prob. 10MCCh. 10 - On January 1, Duane Company purchases land at a...Ch. 10 - Prob. 2RECh. 10 - Utica Corporation paid 360,000 to purchase land...Ch. 10 - Prob. 4RECh. 10 - Prob. 5RECh. 10 - Prob. 6RECh. 10 - Nabokov Company exchanges assets with Faulkner...Ch. 10 - Prob. 8RECh. 10 - Dexter Construction Corporation is building a...Ch. 10 - Prob. 10RECh. 10 - Prob. 11RECh. 10 - Ricks Towing Company owns three tow trucks. During...Ch. 10 - Inclusion in Property, Plant, and Equipment...Ch. 10 - Prob. 2ECh. 10 - Acquisition Costs Voiture Company manufactures...Ch. 10 - Determination of Acquisition Cost In January 2019,...Ch. 10 - Asset Retirement Obligation Big Cat Exploration...Ch. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Exchange of Assets Two independent companies,...Ch. 10 - Exchange of Assets Use the same information as in...Ch. 10 - Prob. 11ECh. 10 - Exchange of Assets Goodman Company acquired a...Ch. 10 - Exchange of Assets Use the same information as in...Ch. 10 - Prob. 14ECh. 10 - Self-Construction Harshman Company constructed a...Ch. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Expenditures after Acquisition McClain Company...Ch. 10 - Prob. 21ECh. 10 - Prob. 1PCh. 10 - Classification of Costs Associated with Assets The...Ch. 10 - Prob. 3PCh. 10 - Comprehensive At December 31, 2018, certain...Ch. 10 - Assets Acquired by Exchange Bremer Company made...Ch. 10 - Assets Acquired by Exchange Bussell Company...Ch. 10 - Self-Construction Olson Machine Company...Ch. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Events Subsequent to Acquisition The following...Ch. 10 - Prob. 11PCh. 10 - Prob. 1CCh. 10 - Prob. 2CCh. 10 - Cost Issues Deskin Company purchased a new machine...Ch. 10 - Prob. 4CCh. 10 - Prob. 5CCh. 10 - Prob. 6CCh. 10 - Prob. 7CCh. 10 - Prob. 9CCh. 10 - Prob. 10CCh. 10 - Prob. 11C
Knowledge Booster
Similar questions
- 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…arrow_forwardAssume 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…arrow_forwardAssume 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…arrow_forward
- During 2020, Prospect Company incurred P4,000,000 in exploration cost for each of the 15 oil wells drilled in 2020. Of the 15 wells drilled, 10 were dry holes. The entity used the successful effort method of accounting. The entity depleted 30% of the oil discovered in 2020. What amount of exploration cost should be reported in the December 31, 2020 statement of financial position? a.42,000,000b.14,000,000c.20,000,000d.6,000,000arrow_forwardMikell Builders contracted to build a high-rise for $10,000,000. Construction began in 2020 and is expected to be completed in 2022. Data for 2020 and 2021 are: 2020 2021 2022 Costs to date 4,500,000 7,200,000 8,600,000 Estimated costs to complete 3,000,000 1,200,000 0 Mikell uses the percentage-of-completion method. Required: Compute the amount of gross profit (loss) that Mikell must report for 2020. Compute the amount of gross profit (loss) that Mikell must report for 2021. Compute the amount of gross profit (loss) that Mikell must report for 2022. Assume instead that Mikell uses the completed contract method. Compute the amount of gross profit (loss) that Mikell must report for each the three years - 2020, 2021, and 2022.arrow_forwardSandhill Builders contracted to build a high-rise for $29,000,000. Construction began in 2024 and is expected to be completed in 2026. Data for 2024 and 2025 are: Costs incurred to date Estimated costs to complete (a) 2024 $3,700,000 14,800,000 Sandhill uses the percentage-of-completion method. Gross profit $ 2025 $10,920,000 10,080,000 How much gross profit should be reported for 2024?arrow_forward
- Recording Long-Term Construction: Recognize Revenue at a Point in Time and Over Time Watson Construction Company contracted to build a plant for $500,000. Construction started in January 2020 and was completed in November 2021. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. 2020 2021 Costs incurred during year $290,000 $120,000 Estimated additional costs to complete 125,000 0 Billings during year 270,000 230,000 Cash collections during year 250,000 250,000 Revenue Recognized at a Point in Time Revenue Recognized Over Time a. Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses. Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr.…arrow_forwardIn 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Show Transcribed Text Revenue Gross profit (loss) 3 2024 2024 2025 $ 2,204,000 $ 3,192,000 5,396,000 2,140,000 1,870,000 2025 2,204,000 3,256,000 3,200,000 Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. Note: Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. 2026 2026 $ 2,424,400 0 4,604,000 4,930,000arrow_forwardIn 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Problem 6-10 (Algo) Part 4 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Costs incurred during the year Estimated costs to complete as of year-end Revenue Gross profit (loss) S 4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming the following costs incurred and costs to complete information. 2024 Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign. Answer is not complete. 2024 $ 2,184,000 5,616,000 2,120,000 1,860,000 2,800,000 2025 2025 $ 3,510,000…arrow_forward
- Assume Avaya contracted to provide a customer with Internet infrastructure for $2,350,000. 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 2024 2025 $ 328,000 $ 1,830,000 1,312,000 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…arrow_forwardIn 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Revenue Gross profit (loss) Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. Note: Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. Answer is complete and correct. 2024 $ 2,400,000 5,600,000 2,000,000 1,800,000 2024 $ 3,000,000 $ $ 600,000 $ 2025 2026 4,500,000 $ 2,500,000 900,000 $ 300,000 2025 $ 3,600,000 2,000,000 4,000,000 3,600,000 2026 $ 2,200,000 0 4,000,000 4,600,000arrow_forwardResearch and development cost for Herald Corporation for the year ended December 31, 2018: Project A - Expected total revenues P7,000,000, starting in early 2018. Expected total costs will be P5,000,000. Costs incurred to date, all in 2019, are P2,200,000. Project B - Expected total revenues P6,000,000. Costs incurred to date are P3,500,000. Expected total costs are P4,500,000. The commencement of commercial sales is uncertain due to problems in raising funds to cover the final development costs. Project C - Expected total revenues, P3,500,000 with P1,000,000 of revenue already earned in 2018. Total development costs incurred, all in 2018, were P3,800,000. Research projects. Total costs spend in 2018 were P1,500,000. What total amount should be charged against income in 2018 related to the research and development costs?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning