Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion [LO5-9]...
Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion [LO5-9]
Brady Construction Company contracted to build an apartment
complex for a price of $6,000,000. Construction began in 2018 and
was completed in 2020. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
| Estimated Costs to Complete | ||||||||||||
|
Costs Incurred During Year |
(As of the End of the Year) |
|||||||||||
|
Situation |
2018 |
2019 |
2020 |
2018 |
2019 |
2020 |
||||||
| 1 | 1,600 | 2,430 | 1,200 | 3,630 | 1,200 | — | ||||||
| 2 | 1,600 | 1,200 | 2,800 | 3,630 | 2,800 | — | ||||||
| 3 | 1,600 | 2,430 | 2,400 | 3,630 | 2,300 | — | ||||||
| 4 | 600 | 3,100 | 1,200 | 4,200 | 925 | — | ||||||
| 5 | 600 | 3,100 | 2,000 | 4,200 | 2,300 | — | ||||||
| 6 | 600 | 3,100 | 2,800 | 5,600 | 2,600 | — | ||||||
Required:
Complete the following table. (Do not round intermediate
calculations. Enter answers in dollars. Round your final answers to
the nearest whole dollar. Negative amounts should be indicated by a
minus sign.)
|
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Homework Answers
Solution:
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 1) | |||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) | |
| 2018 | $1,600,000 | $1,600,000 | $5,230,000 | 30.59% | $6,000,000 | $1,835,564 | $1,835,564 | $235,564 | |
| 2019 | $2,430,000 | $4,030,000 | $5,230,000 | 77.06% | $6,000,000 | $4,623,327 | $2,787,763 | $357,763 | |
| 2020 | $1,200,000 | $5,230,000 | $5,230,000 | 100.00% | $6,000,000 | $6,000,000 | $1,376,673 | $176,673 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 2) | |||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) | |
| 2018 | $1,600,000 | $1,600,000 | $5,230,000 | 30.59% | $6,000,000 | $1,835,564 | $1,835,564 | $235,564 | |
| 2019 | $1,200,000 | $2,800,000 | $5,600,000 | 50.00% | $6,000,000 | $3,000,000 | $1,164,436 | -$35,564 | |
| 2020 | $2,800,000 | $5,600,000 | $5,600,000 | 100.00% | $6,000,000 | $6,000,000 | $3,000,000 | $200,000 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 3) | |||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) | |
| 2018 | $1,600,000 | $1,600,000 | $5,230,000 | 30.59% | $6,000,000 | $1,835,564 | $1,835,564 | $235,564 | $1,666,667 - $1,500,000 |
| 2019 | $2,430,000 | $4,030,000 | $6,330,000 | 63.67% | $6,000,000 | $3,819,905 | $1,984,341 | -$565,564 | $6,000,000 - $6,330,000 - $235,564 |
| 2020 | $2,400,000 | $6,430,000 | $6,430,000 | 100.00% | $6,000,000 | $6,000,000 | $2,180,095 | -$100,000 | $6,000,000 - $6,430,000 - $235564 + $565,564 |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 4) | |||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) | |
| 2018 | $600,000 | $600,000 | $4,800,000 | 12.50% | $6,000,000 | $750,000 | $750,000 | $150,000 | |
| 2019 | $3,100,000 | $3,700,000 | $4,625,000 | 80.00% | $6,000,000 | $4,800,000 | $4,050,000 | $950,000 | |
| 2020 | $1,200,000 | $4,900,000 | $4,900,000 | 100.00% | $6,000,000 | $6,000,000 | $1,200,000 | $0 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 5) | |||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) | |
| 2018 | $600,000 | $600,000 | $4,800,000 | 12.50% | $6,000,000 | $750,000 | $750,000 | $150,000 | |
| 2019 | $3,100,000 | $3,700,000 | $6,000,000 | 61.67% | $6,000,000 | $3,700,000 | $2,950,000 | -$150,000 | |
| 2020 | $2,000,000 | $5,700,000 | $5,700,000 | 100.00% | $6,000,000 | $6,000,000 | $2,300,000 | $300,000 | |
| Computation of % of completion, revenue recognition and Gross Profit - Brady Construction Company (Situation 6) | |||||||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) | |
| 2018 | $600,000 | $600,000 | $6,200,000 | 9.68% | $6,000,000 | $580,645 | $580,645 | -$200,000 | $6,000,000 - $6,200,000 |
| 2019 | $3,100,000 | $3,700,000 | $6,300,000 | 58.73% | $6,000,000 | $3,523,810 | $2,943,164 | -$100,000 | $6,000,000 - $6,300,000 + $200,000 |
| 2020 | $2,800,000 | $6,500,000 | $6,500,000 | 100.00% | $6,000,000 | $6,000,000 | $2,476,190 | -$200,000 | $6,000,000 - $6,500,000 + $200,000 + $100,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 1) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2018 | $1,600,000 | $1,600,000 | $5,230,000 | $6,000,000 | $0 |
| 2019 | $2,430,000 | $4,030,000 | $5,230,000 | $6,000,000 | $0 |
| 2020 | $1,200,000 | $5,230,000 | $5,230,000 | $6,000,000 | $770,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 2) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2018 | $1,600,000 | $1,600,000 | $5,230,000 | $6,000,000 | $0 |
| 2019 | $1,200,000 | $2,800,000 | $5,600,000 | $6,000,000 | $0 |
| 2020 | $2,800,000 | $5,600,000 | $5,600,000 | $6,000,000 | $400,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 3) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2018 | $1,600,000 | $1,600,000 | $5,230,000 | $6,000,000 | $0 |
| 2019 | $2,430,000 | $4,030,000 | $6,330,000 | $6,000,000 | -$330,000 |
| 2020 | $2,400,000 | $6,430,000 | $6,430,000 | $6,000,000 | -$100,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 4) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2018 | $600,000 | $600,000 | $4,800,000 | $6,000,000 | $0 |
| 2019 | $3,100,000 | $3,700,000 | $4,625,000 | $6,000,000 | $0 |
| 2020 | $1,200,000 | $4,900,000 | $4,900,000 | $6,000,000 | $1,100,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 5) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2018 | $600,000 | $600,000 | $4,800,000 | $6,000,000 | $0 |
| 2019 | $3,100,000 | $3,700,000 | $6,000,000 | $6,000,000 | $0 |
| 2020 | $2,000,000 | $5,700,000 | $5,700,000 | $6,000,000 | $300,000 |
| Computation of Gross Profit - Revenue on completion - Brady Construction Company (Situation 6) | |||||
| Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit |
| 2018 | $600,000 | $600,000 | $6,200,000 | $6,000,000 | -$200,000 |
| 2019 | $3,100,000 | $3,700,000 | $6,300,000 | $6,000,000 | -$100,000 |
| 2020 | $2,800,000 | $6,500,000 | $6,500,000 | $6,000,000 | -$200,000 |
Add Answer to:
Exercise 5-21 Income (loss) recognition; Long-term contract;
revenue recognition over time vs. upon project completion
[LO5-9]...
Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO5-9)...
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Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO5-9) Brady Construction Company contracted to build an apartment complex for a price of $6,300,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Costs incurred During Year Situation 2018 2019 2020 1 1,630 2,520 1,290 2 1630 1,290...
Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion [LO5-9]...
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Exercise 6-23 (Static) Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion...
Exercise 6-23 (Static) Income (loss) recognition; Long-term
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[LO6-9] Brady Construction Company contracted to build an apartment
complex for a price of $5,000,000. Construction began in 2021 and
was completed in 2023. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Situation 1 2 3 4 Costs Incurred During Year 2021 2022 2023 1,500 2,100...
Exercise 6-23 (Algo) Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion...
Exercise 6-23 (Algo) Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO6-9) Brady Construction Company contracted to build an apartment complex for a price of $6,800,000. Construction began in 2021 and was completed in 2023. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Situation 1 2 3 4 5 6 Costs Incurred During Year 2021 2022 2023...
Exercise 6-23 (Algo) Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion...
Exercise 6-23 (Algo) Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO6-9] Brady Construction Company contracted to build an apartment complex for a price of $6,200,000. Construction began in 2021 and was completed in 2023. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Situation 1 2 3 4 5 6 Costs Incurred During Year 2021 2022 2023...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company...
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Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO5-9) Brady Construction Company contracted to build an apartment complex for a price of $6,300,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Costs Incurred During Year Situation 2018 2019 2020 1 1,630 2,520 1,290 2 1,630 1,290...
Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO5-9) Brady Construction Company contracted to build an apartment complex for a price of $6,300,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Costs incurred During Year Situation 2018 2019 2020 1 1,630 2,520 1,290 2 1630 1,290...
Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion [LO5-9] Brady Construction Company contracted to build an apartment complex for a price of $6,200,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars Estimated Costs to Complete (As of the End of the Year) Costs Incurred During Year...
5-HW O Exercise 5-21 Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO5-9) Brady Construction Company contracted to build an apartment complex for a price of $6,300,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Year Estimated costs to Complete Costs incurred During (As of the End of...
brady construction company contracted to build an apartment for a
price of $6,000,000.
Brady Construction Company contracted to build an apartment complex for a price of $6,000,000. Construction began in 2021 and was completed in 2023. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Estimated Costs to Complete Costs Incurred (As of the End During Year of the Year) Situation 2021 2022...
Exercise 5-18 Long-term contract; revenue recognition over time vs. upon project completion [LO5-9] On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington D.С., for $270 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2018 2019 2020 $ 50 $100 60...
Exercise 6-23 (Static) Income (loss) recognition; Long-term
contract; revenue recognition over time vs. upon project completion
[LO6-9] Brady Construction Company contracted to build an apartment
complex for a price of $5,000,000. Construction began in 2021 and
was completed in 2023. The following is a series of independent
situations, numbered 1 through 6, involving differing costs for the
project. All costs are stated in thousands of dollars.
Situation 1 2 3 4 Costs Incurred During Year 2021 2022 2023 1,500 2,100...
Exercise 6-23 (Algo) Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO6-9) Brady Construction Company contracted to build an apartment complex for a price of $6,800,000. Construction began in 2021 and was completed in 2023. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Situation 1 2 3 4 5 6 Costs Incurred During Year 2021 2022 2023...
Exercise 6-23 (Algo) Income (loss) recognition; Long-term contract; revenue recognition over time vs. upon project completion (LO6-9] Brady Construction Company contracted to build an apartment complex for a price of $6,200,000. Construction began in 2021 and was completed in 2023. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Situation 1 2 3 4 5 6 Costs Incurred During Year 2021 2022 2023...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $30,000000 The road was completed in 2020 Information related to the contract is as folows Billings during the year Cash cellections during the year 1,800,0003,690,84,600,0 SeferencesWestgate Construction uses the completed contract method of accounting for long-term construction contrects Required: 1. Calculate the amount of revenue and gross profit (oss) to be...
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