Problem
Assume Avaya contracted to provide a customer with Internet infrastructure for $2,400,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: 2024 2025 Costs incurred during the year $ 332,000 $ 1,850,000 Estimated costs to complete as of 12/31 1,328,000 0 Billings during the year 441,000 1,700,000 Cash collections during the year 351,000 1,790,000 Required: Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time.