Question

Check my work 10 Curtiss Construction Company, Inc., entered into a fixed-price contract with Axelrod Associates on July 1, 2021, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,000,000. The building was completed on December 31, 2023. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: 20 points eBook Print At 12-31-2021 10% $ 350,000 3,150,000 720,000 At 12-31-2023 100% $4,250,000 Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date At 12-31-2022 60% $2,500,000 1,700,000 2,170,000 References 4,000,000 Required: 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2021 and 2022 as either cost in excess of billings or billings in excess of costs. Complete this question by entering your answers in the tabs below.

Answer 1

Requirement -1	2021	2022	2023
Contract price	$                                   4,000,000	$                                                                          4,000,000	$4,000,000
Actual costs to date	$                                       350,000	$                                                                          2,500,000	$4,250,000
Estimated costs to complete	$                                   3,150,000	$                                                                          1,700,000	$              -
Total estimated costs	$                                   3,500,000	$                                                                          4,200,000	$4,250,000
Estimated gross profit
(actual in 2023)	$                                       500,000	$                                                                            -200,000	$ -250,000
Gross profit (loss) recognized:
Year 2021	$                                                 -
Year 2022	$                                     -200,000
Year 2023	$                                       -50,000
Requirement -2
Gross profit (loss) recognized:
2021	($4,000,000*10%)-$350,000	$                                                                                50,000
2022	($200,000)-$50,000	$                                                                            -250,000
2023	($250,000)-($2,00,000)	$                                                                              -50,000
Requirement -3
Balance Sheet
	Year 2021	Year 2022
Current Assets:
Costs less Loss ($2,300,000) in excess of billing $2,170,000		$                                                                              130,000
Current Liabilities:
Billings ($720,000) in excess of cost and profit $400,000	$                                       320,000

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