Constructing and Assessing Income Statements Using Cost-to-Cost Method Assume Ge

Question

Constructing and Assessing Income Statements Using Cost-to-Cost Method
Assume General Electric Company agreed in May 2016 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. The contract price of $450 million is to be paid as follows: $150 million at the time of signing; $150 million on December 31, 2016; and $150 million at completion in May 2017. General Electric incurred the following costs in constructing the generator: $144 million in 2016 and $216 million in 2017.

a. Compute the amount of General Electric's revenue, expense, and income for both 2016 and 2017, and for both years combined, under the cost-to-cost revenue recognition method.
Enter dollar amounts in millions.

Constructing and Assessing Income Statements Using Cost-to-Cost Method Assume General Electric Company agreed in May 2016 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. The contract price of $450 million is to be paid as follows $150 million at the time of signing: $150 million on December 31, 2016; and $150 million at completion in May 2017. General Electric incurred the following costs in constructing the generator: $144 million in 2016 and $216 million in 2017 a. Compute the amount of General Electric's revenue, expense, and income for both 2016 and 2017, and for both years combined, under the cost-to-cost revenue recognition method Enter dollar amounts in millions. Cost-to-Cost Method % of total excepted costs Costs Revenue Year Income incurred recognized 2016 $ 2017 ota Check

Explanation / Answer

Income in 2016 = 180-144 = 36

Income in 2017 = 216-270 = 54

Year Costs incurred % Total cost excepted costs Revenue recognized Income 2016 144 40% (144/360) 180 (450 x 40%) 36 2017 216 60% (216/360) 270 (450x60%) 54 Total 360 100% 450 90

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.