90.2K

Verified Solution

Link Copied!

Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,550,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below: 2019 $1,960,000 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2018 $ 344,000 1,376,000 456,000 272,000 1,730,000 1,805,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 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 2018 assuming Nortel 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 the end of 2018 assuming this project does not qualify for revenue recognition over time. Percentages of completion Choose denominator Choose numerator % complete to date 2018 2019 2018 Recognized in prior years To date Recognized in 2018 Construction revenue Construction expense Gross profit (loss) 2019 Recognized in prior years To date Recognized in 2019 Construction revenue Construction expense Gross profit (loss) Revenue Gross Profit (Loss) 2018 2019 Balance Sheet (Partial) At December 31, 2018 Current assets: Current liabilities: Balance Sheet (Partial) At December 31, 2018 Current assets: Current liabilities

Answer & Explanation Solved by verified expert

See Answer