Check my work mode : This show s what is correct or incorrect for the work you h

Question

Check my work mode : This show s what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return t On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $270 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions);: 2018 2819 2828 $5e $180 $68 2-38 Costs incurred during the year Estimated costs to complete as of December 31 15e 98- Required: 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion 2. Compute the revenue assuming this project does not qualify for revenue recognition over time 3. Suppose the estimated costs to complete at the end of 2019 are $100 million instead of $90 million. revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract 8 Answer is not complete. Complete this question by entering your answers in the tabs below. 4/11/2018 Type here to search

Explanation / Answer

Solution:

1).

270*.53=143.10

143.10-67.5=75.60

3).

2018 2019 2020 Contract Price $270 $270 $270 Less: Estimated Cost Cost to Date (a) $50 $100 $60 Cost to complete(b) $150 $90 0 Total Cost(a+b) $200 $190 $60 Gross Profit ( Contract price- total cost) $70 $80 $210 Percentage compeleted ( a/total cost) 50/200=25% 100/190=53% 60/60=100% Total Revenue $270 $270 $270 Percentage completed 25% 53% 100% Revenue 270*.25=67.5

270*.53=143.10

143.10-67.5=75.60

270-67.5-75.6=126.90 67.5+75.6+126.90=270 Gross Profit Revenue 67.5 143.10 270 Cost 50 100 60 17.5 17.5 17.5 25.6 25.60 166.90

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