Assume Nortel Networks contracted to provide a customer withInternet infrastructure for $2,050,000. The project began in 2018and was completed in 2019. Data relating to the contract aresummarized below:
20182019
Costs incurred during the year$304,000 $1,595,000
Estimated costs to complete as of 12/311,216,000 0
Billings during the year 385,000 1,630,000
Cash collections during the year252,000 1,755,000
Required:
1. Compute the amount of revenue and gross profit or loss to berecognized in 2018 and 2019 assuming Nortel recognizes revenue overtime according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to berecognized in 2018 and 2019 assuming this project does not qualifyfor revenue recognition over time.
3. Prepare a partial balance sheet to show how the informationrelated to this contract would be presented at the end of 2018assuming Nortel recognizes revenue over time according topercentage of completion.
4. Prepare a partial balance sheet to show how the informationrelated to this contract would be presented at the end of 2018assuming this project does not qualify for revenue recognition overtime.
- Required 1
- Required 2
- Required 3
- Required 4
Compute the amount of revenue and gross profit or loss to berecognized in 2018 and 2019 assuming Nortel recognizes revenue overtime according to percentage of completion. (Loss amounts should beindicated with a minus sign. Use percentages as calculated androunded in the table below to arrive at your final answer.)
|
| | Percentages of completion | | Choose numerator | ÷ | Choose denominator | = | % complete to date | | | | | | | | 2018 | | ÷ | | = | | | 2019 | | ÷ | | = | | | | | | | | | 2018 | | To date | Recognized in prior years | Recognized in 2018 | | Construction revenue | | | | | Construction expense | | | | | Gross profit (loss) | | | | | | | 2019 | | To date | Recognized in prior years | Recognized in 2019 | | Construction revenue | | | | | Construction expense | | | | | Gross profit (loss) | | | |
|
