Solution 1:
Computation of % of completion, revenue recognition and Gross Profit - Sanderson Construction (In Millions) | ||||||||
Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) | % of completion (D) (B/C) |
Contract Price (E) |
Total Revenue to be recoganized (F) (E * D) | Revenue for current period (G) | Gross Profit (H) (G - A) |
2021 | $40 | $40 | $160 | 25.00% | $220 | $55 | $55 | $15 |
2022 | $80 | $120 | $180 | 66.67% | $220 | $147 | $92 | $12 |
2023 | $50 | $170 | $170 | 100.00% | $220 | $220 | $73 | $23 |
Solution 2:
Computation of Gross Profit - Revenue on completion -Sanderson Construction Company | ||||||
Year | Actual cost incurred (A) | Total cost incurred till date (B) | Total estimated Cost ( C ) |
Contract Price (D) |
Gross Profit | Revenue |
2021 | $40 | $40 | $160 | $220 | $0 | $0 |
2022 | $80 | $120 | $180 | $220 | $0 | $0 |
2023 | $50 | $170 | $170 | $220 | $50.00 | $220.00 |
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On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $320 million. The expected completion date is April 1, 2023, just in time for the 2023 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2021 2022 2023 Costs incurred during the year $ 80 $ 40 $ 90 Estimated costs to complete as of...
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