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Computing Revenue and Gross Profit on Long-Term Construction Contract Supplier Corp. enters into...

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Accounting

Computing Revenue and Gross Profit on Long-Term Construction Contract
Supplier Corp. enters into a government contract during the year to provide computer equipment for $3,200,000. The contract consists of a single performance obligation to provide specified
equipment in three years. Total costs estimated by Supplier Corp. for the contract are $2,240,000. The equipment is highly specialized and has no alternative uses. As negotiated in the contract, any
costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp. in the event of a contract cancellation. Actual costs incurred during the year were $1,024,000 including
unexpected cost overruns of $128,000 due to labor inefficiencies.
' a point in time for this contract?
b. Calculate (1) recognized revenue, (2) the gross profit, and (3) adjusted contract margin to be recorded during the year.
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