Exam 8: Extenssion: Ol Revenue Recognition Previous Standard

Brutus Construction Brutus Construction started work on a new high rise building on January 1, 2016. The project completion date is December 2018. The contract price is $54,000,000. The following are the actual costs incurred and estimates of cost to complete the project. Years Actual costs incurred Estimated costs to complete 2016 \ 15,000,000 \ 30,000,000 2017 22,500,000 22,500,000 2018 17,500,000 -0- -Refer to Brutus Construction. Calculate gross profit or loss for each year using the completed-contract method.

What is a major difference between GAAP and IFRS with regard to recognition of revenue?

If the percentage-of-completion method is used and an interim loss is incurred on a long-term contract, it is necessary to recognize that loss in full.

For revenues earned over an extended time period, a company should disclose the unearned revenue.

Gleason Construction enters into a long-term fixed price contract to build an office building for $20,000,000. In the first year of the contract Gleason incurs $7,000,000 of cost and the engineers determined that the remaining costs to complete are $7,000,000. How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the completed-contract method?

Under the completed-contract method, the firm only reports profit in the final year of the contract.

Craft Construction Craft Construction entered into a contract to construct a generator station for a utility customer. The project was started in 2016 and completed in 2017. Cost and other information is presented below. Costs incurred during the year \ 225,000 \ 550,000 Estimated costs to complete 450,000 -0- Billings during the year 200,000 700,000 Cash collections during the year 150,000 750,000 -Refer to Craft Construction. Assume that Craft uses the zero-gross-profit approach for revenue recognition. Make the appropriate journal entries for 2016 and 2017 for Craft Company.

Camey Construction enters into a long-term fixed price contract to build an office building for $9,000,000. In the first year of the contract Camey incurs $1,000,000 of cost and the engineers determined that the remaining costs to complete are $2,100,000. Camey billed $1,700,000 and collected $1,300,000 in Year 1. Refer to Camey Construction. How much should Camey recognize as Accounts Receivable at the end of Year 1 assuming the use of the percentage-of-completion method?

Companies may use the completed-contract method for all long term contracts.

On November 15, 2016, LaGrow Developers sold a parcel of land for $6,000,000. They had originally paid $3,600,000 for the land. The terms of the sale called for a $2,000,000 down payment, and the balance in two equal installments payable on November 15, 2017 and November 15, 2018. Disregard interest charges. LaGrow has a December 31 year-end. Refer to LaGrow Developers. Assuming that LaGrow uses the installment sales method, the company would recognize gross profit in 2017 of ________. (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)

Tullis Construction enters into a long-term fixed price contract to build an office tower for $15,000,000. In the first year of the contract. Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete are $5,000,000. Tullis billed $3,700,000 in year 1 and collected $3,100,000 by the end of the end of the year. Refer to Tullis Construction. How much gross profit should Tullis recognize in Year 1 assuming the use of the percentage-of-completion method? (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)

What are the three steps in the process for determining the amount and timing of revenue recognition for multiple-element arrangements?

According to the FASB, revenue is defined as inflows that result from delivering or producing goods or providing services connected to a company's major business operations.

Tullis Construction enters into a long-term fixed price contract to build an office tower for $14,000,000. In the first year of the contract. Tullis incurs $5,000,000 of cost and the engineers determined that the remaining costs to complete are $5,000,000. Tullis billed $7,600,000 in year 1 and collected $5,800,000 by the end of the end of the year. Refer to Tullis Construction. How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the percentage-of-completion method?

When using the IFRS zero-gross-profit approach, ________.

The Billings on Construction in Progress is a(n) ________.

Which one of the following is not an indicator of a consignment arrangement?

Explain the similarities and differences between the two methods of accounting for long-term contracts.

Tullis Construction enters into a long-term fixed price contract to build an office tower for $14,000,000. In the first year of the contract, Tullis incurs $5,000,000 of cost and the engineers determined that the remaining costs to complete are $5,000,000. Tullis billed $6,000,000 in year 1 and collected $3,700,000 by the end of the end of the year. Refer to Tullis Construction. What would be the journal entry in Year 1 to record revenue assuming the use of the percentage-of-completion method? (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)

Camey Construction enters into a long-term fixed price contract to build an office building for $6,000,000. In the first year of the contract Camey incurs $1,400,000 of cost and the engineers determined that the remaining costs to complete are $2,200,000. Camey billed $3,800,000 and collected $1,000,000 in Year 1. Refer to Camey Construction. How should Camey report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the percentage-of-completion method? (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)