Solution
Nortel Networks
Requirement 2:
Computation of the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time:
The contract does not quality for revenue recognition in 2018- gross profit for 2018 is zero, as the contract is not yet completed.
Revenue for 2019 - $2,700,000
Gross profit, 2019 = revenue – total estimated cost
= $2,700,000 - $2,491,000 = $209,000
Workings:
2018 |
2019 |
|
Contract Price |
$2,700,000 |
$2,700,000 |
Actual Costs to Date |
$356,000 |
$2,491,000 |
Estimated Cost to Complete |
$1,424,000 |
0 |
Total Estimated Costs |
$1,780,000 |
$2,491,000 |
Gross profit estimated in 2018 |
$920,000 |
$209,000 |
Only requirement 2 please. Thank you Assume Nortel Networks contracted to provide a customer with Internet...
Requirement 3 please
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