Curtiss Construction Company, Inc., entered into a fixed-pricecontract with Axelrod Associates on July 1, 2018, to construct afour-story office building. At that time, Curtiss estimated that itwould take between two and three years to complete the project. Thetotal contract price for construction of the building is$4,780,000. Curtiss concludes that the contract does not qualifyfor revenue recognition over time. The building was completed onDecember 31, 2020. Estimated percentage of completion, accumulatedcontract costs incurred, estimated costs to complete the contract,and accumulated billings to Axelrod under the contractwere as follows:
| At 12-31-2018 | | At 12-31-2019 | | At 12-31-2020 |
| Percentage of completion | | 10 | % | | | 60 | % | | | 100 | % |
| Costs incurred to date | $ | 372,000 | | | $ | 3,066,000 | | | $ | 5,173,000 | |
| Estimated costs to complete | | 3,348,000 | | | | 2,044,000 | | | | 0 | |
| Billings to Axelrod, to date | | 733,000 | | | | 2,430,000 | | | | 4,780,000 | |
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Required:
1. Compute gross profit or loss to be recognized as aresult of this contract for each of the three years.
2. Assuming Curtiss recognizes revenue over timeaccording to percentage of completion, compute gross profit or lossto be recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over timeaccording to percentage of completion, compute the amount to beshown in the balance sheet at the end of 2018 and 2019 as eithercost in excess of billings or billings in excess of costs.
