Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2013 and was completed in 2014. Data relating to the contract are summarized below:
|
2013 |
2014 |
| Costs incurred during the year |
$ |
300,000 |
|
$ |
1,575,000 |
|
| Estimated costs to complete as of 12/31 |
|
1,200,000 |
|
|
0 |
|
| Billings during the year |
|
380,000 |
|
|
1,620,000 |
|
| Cash collections during the year |
|
250,000 |
|
|
1,750,000 |
|
|
| Required: |
| 1. |
Compute the amount of gross profit or loss to be recognized in 2013 and 2014 using the percentage-of-completion method.
|
|
| 2. |
Compute the amount of gross profit or loss to be recognized in 2013 and 2014 using the completed contract method.
| 3. |
Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2013 using the percentage-of-completion method.
| 4. |
Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2013 using the completed contract method.
|
|
|
|