Question

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Can you please help me with this problem and give an explanation for the required tabs (1,2 and 3)? Thank you

Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $5,140,000. Curtiss concludes that the contract does not qualify for revenue recognition over time. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: At 12-31-2021 10% $ 378,000 3,402,000 739,000 Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date At 12-31-2022 60% $3,318,000 2,212,000 2,550,000 At 12-31-2023 100% $5,599,000 5,140,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs. Complete this question by entering your answers in the tabs below.

Answer 1

Answer Page: No ① o Gorosa puolito con los estos be recognized as a oresulta ng the contracte for each of three years 2021 Anal coof incurred - $378000 Total coof in cuvid till date = $ 348000 Yig complion = 10%. Fetal estimated cost = 348000 = $ 3780,000 Contract price = $5140,000 Tobal revenue to be recognized - 100%. X 5140,000 E 514000 Revenue for Cerent period - $514000 Grons profit = 514000 – 348000 = $136000 ** Gross profit = $136000 022 Actual cost curred = $33/8000 - $378000 -$2940,000

Page No ③ Total coof Powered Gill date = $ 3318000 Total estimated cook - 3318000 = $5530,000 y of completion = 60% Contract price = $ 5140,000 Pobal revenue to be recognized = 5140,000 X 60% = $ 3084000 Revenue for Current period = 3084000 - 514000 =¢ 2570000 Gross profit or loss = 5140,000 – 5530,000 - $ 136000 - $526000 ... Gross profit (loms) = ($526000) 2023 Actual cosf incwured = 5599000 - 2940,000 - 378000 - $2281000

Page No ③ Total cost incurved till date = $ 5599000 % of completion = 100 %, Total estimated cosf = $5599000 Contract price = $5140,000 Tot al oreverve to be recognized = 5140,000 * 100%. = $5140,000 Revenue for current period = 2570,000 - 514000 =$ 2056000 Gross profit = 5140,000 - 5579000 — 136000 +586000 = Year recognized 2021 - $69000 Groms profit from $136000 - $526000 - $69000 -$469000 నీరు 2003 Total

Page No 9 incorred estimated in Curred @ Go mes Realit / loos recognized Tu Actual cost Total cost totalul contract | Gros profit Revenue ! price or loss Recognized 2021 $378000 $378000 $3480,000 $5140,000 $0 $0 2022 $2940,000 $3318000 $5530,000 $5140,000-$390,000 $0 (136000-526000 2023 2281000 $ 5599000 $5599000 $5140,000 - $69000 65140,000 © Balance sheet con dei CPartiel) Carske profit in ezcess of biling = $33]8000 – $ 2550,000 - $ 390,000 = $ 378000 Billinges én excess of coobs & poofit - $ 739000 - $514000 = $225000 Particulars Assető : - current assets Cool & profit in excess of billings ... $378000 Liabilities & rofack holders equity Billings in excess of costs & profits $225000 2021 2022