Partil-Exercises Saved Help Save & Ex Chec On June 15, 2018, Sanderson Construct
ID: 2520091 • Letter: P
Question
Partil-Exercises Saved Help Save & Ex Chec 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 2019 2020 $50 $100 $6? Costs incurred during the year Estimated costs to complete as of December 31 150 9 Required 1. Comput assuming Sanderson recognizes revenue over time according to e the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract d gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract 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. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 d nste to complete at the end of 2019 are $100 million instead of $90 million. Compute the amount ofExplanation / Answer
part 1 2018 2019 2020 contract Price $ 270 $ 270 $ 270 Actual Cost to Date $ 50 $ 150 $ 210 estimated Cost to complete $ 150 $ 90 $ - Total Estimated Cost $ 200 $ 240 $ 210 Estimated Gross Profit $ 70 $ 30 $ 60 % of work completed in the period 25% 63% 100% Revenue Recognition 2018 % of work completed in the period * total contract price 25% * 270 $ 67.50 2019 % of work completed in the period * total contract price 63% * 270 $ 170.10 2020 total project cost - ( Revenue recognition in the past years) 270 - ( 67.5+170.1) $ 32.40 Gross Profit Recognition 2018 67.50 - 70 $ (2.50) 2019 170.10 - 30 $ 140.10 2020 32.40 - 60 $ (27.60) Part 2 Yaer Revenue Recognised Gross Profit recognised 2018 $ - $ - 2019 $ - $ 140 2020 $ 270 $ - Part 3 2018 2019 2020 contract Price $ 270 $ 270 $ 270 Actual Cost to Date $ 50 $ 150 $ 210 estimated Cost to complete $ 150 $ 100 $ - Total Estimated Cost $ 200 $ 250 $ 210 Estimated Gross Profit $ 70 $ 20 $ 60 % of work completed in the period 25% 60% 100% Revenue Recognition 2018 % of work completed in the period * total contract price 25% * 270 $ 67.50 2019 % of work completed in the period * total contract price 60% * 270 $ 162.00 2020 total project cost - ( Revenue recognition in the past years) 270 - ( 67.5+162.00) $ 40.50 Gross Profit Recognition 2018 67.50 - 70 $ (2.50) 2019 162.00 - 30 $ 132.00 2020 32.40 - 60 $ (27.60)