Question

Question 3 Free Form Builders Inc., a construction company, recognizes revenue from its long-term contracts using the percentage-of-completion method. On March 29, 2017, the company signed a contract to construct a building for $1 million. The company estimated that it would take four years to complete the contract and estimated the cost to the company at $625,000, as follows: Year Cost 2017 $100,000 2018 $150,000 2019 $175,000 2020 $200,000 Total $625.000 The actual costs in 2017 and 2018 ended up being exactly as estimated. At the end of 2017. Free Form expected costs for 2018-2020 to be exactly as estimated. However, on December 31, 2018, the company revised its estimates for the costs in 2019 and 2020. It estimated that it would cost $200,000 in 2019 and $300,000 in 2020 to complete the contract. 2019's actual costs were $100.000 more than estimated. At the end of 2019, the estimated costs to complete the contract were $400,000. 2020's actual costs ended up being $50,000 less than estimated. Required: Compute the revenue, expense, and profit/loss for each of the four years. Use FOUR DECIMAL PLACES (for calculation of percentage completed). Question 4 The following information relates to the held-for-trading investments ("HFTI") of Anders Corp. Acquisition Acquisition Date Selling Market Value Dec. 31 Security Date Cost Sold Price 2016 2017 2018 Alpha Apr. 13, 2016 $140,000 N/A N/A $130,000 $140,000 $150,000 Beta Aug. 24, 2016 $80,000 May 27, 2017 $100,000 $90,000 N/A N/A N/A N/A N/A $70,000 $80,000 Omega Jan 3, 2018 $180,000 June 30, 2018 $200,000 N/A N/A N/A The Anders Corp. closes its books on December 31 each year. ("N/A" means not applicable.) Required: a. Prepare journal entries relating to these held-for-trading investments for each year. (There are NO brokerage fees.) b. Show how the information regarding held-for-trading investments would be presented on the income statement and balance sheet for each year.

Answer 1

Question 3 Free Form Builders Inc., a construction company, recognizes revenue from its long-term contracts using the percentage of completion method
du Free from Builders inc., a construction company, revenue recognise from its long-term contracts using the percentage of completion mothod. year calculations Revenue Expense profileloss) 2017 cost incurred in current year 100,000 cost in curred to date $ 100,000 $ 160,000 $100,000 $ 60,000 total estimated cost 625,000 cost incurred to date/ Total estimated cost 16.0000 percentage . Devenus previously 3 recognized $ 160,000 Revenue recognized

year calculations Revenue | Expensel less 159000 2018 Cost incurred in Current year Cost incurred to - date date total estimated - date 250,000 $ $ 240,000 $ 150,000 $90,000 LA 625,000 cost incurred to datel Total estimated date 40.0000) Dercentage Revenue Devenue recognized previously & 240,000 recognized

[year Revenue Expense profit/1055 2019 300,000 calculations cost incurred in current year cost incurred to date total estimated. Cost percentage complete 559,000 $ 333,333 $ 300,000 $ 33,333 750,000 cost incurred to dete! Total estimated cost 73.3333% evenule previously devenue recogn $333333 recognized

Revenue Expense profilioss? year 2020 calculations cost curreted in Current year cost incurred to 350,000 $ 266,667 $ 350,000 $ (83,333) date 900,000 Total cost I percentage 900,000 cest incurred to dotel 100 Total estimated 73-3 cost. - Complete (Revenue recognized Revenue previously, 266,667 $ 333,333 recognized Totals $ 4000,000 $900,000 $100,000