Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,810,000. The project began in 2016 and was completed in 2017. Data relating to the contract are summarized below:
|
|
2016
|
2017
|
|
Costs incurred during the year
|
$ 368,000
|
$ 2,205,000
|
|
Estimated costs to complete as of 12/31
|
1,472,000
|
0
|
|
Billings during the year
|
525,000
|
1,790,000
|
|
Cash collections during the year
|
284,000
|
1,835,000
|
Required:
Compute the amount of revenue and gross profit or loss to be recognized in 2016 and 2017 assuming Nortel recognizes revenue over time according to percentage of completion.