Question

Check my work 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 $4,480,000. The bullding 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: Percentage of completion Costs incurred to date Estimated costs to complete Billings to Axelrod, to date At 12-31-2021 At 12-31-2022 At 12-31-2023 100 600 1000 $367,000 $2,856,000 $4,818,000 3,303,000 1,904,000 0 728,000 2,330,000 4,480,000 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 bilings in excess of costs. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 3 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. (Leave no cells blank be certain to enter "O" wherever required. Loss amounts should be indicated with a minus sign Show less < Prev 10 of 10 Next

Answer 1

	Requirement 1			2021	2022	2023
	contract price			4480000	4480000	4480000
	actual cost to date			367000	2856000	4818000
	estimated costs to complete			3303000	1904000	0
	total estimated costs			3670000	4760000	4818000
	estimated gross profit			810000	-280000	-338000
	gross profit / loss recognised			0	-280000	-58000	(338000-280000)
	Requirement 2			2021	2022	2023
	contract value completed			448000	2688000	4480000
				(4480000*10%)	(4480000*60%)
	less: reveune recognised till date		0	448000	2688000
	reveune to recognise (based on%)		448000	2240000	1792000
	less : cost incurred during the year(WN2)		367000	2489000	1962000
	gross profit (loss) to be recognised		81000	-249000	-170000
	Requirement 3
	Balance sheet ( partial )			2021	2022
	current assets(WN1)				526000	(2489000-1602000)-361000
	(costs in excess of billing)
	current liabilities			361000
	(billing in excess of costs)			(728000-367000)
	working note			2021	2022	2023
1)	billing during the year			728000	1602000	2878000
					(2330000-728000)	(4480000-1602000)
2)	costs incurred			367000	2489000	1962000
					(2856000-367000)	(4818000-2856000)