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## ACC305 Wk 2 E5-10 Project Contracts

by: kimwood Notetaker

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# ACC305 Wk 2 E5-10 Project Contracts

Marketplace > ACC305 Wk 2 E5 10 Project Contracts
kimwood Notetaker
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ACC305 Wk 2 E5-10 Project Contracts
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This 4 page Study Guide was uploaded by kimwood Notetaker on Friday November 13, 2015. The Study Guide belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 15 views.

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Date Created: 11/13/15
E5-10 – Sanderson Construction 1. Determine the amount of gross profit or loss to be recognized in each of the three years using the percentage- of-completion method. 2. How much revenue will Sanderson report in its 2011 and 2012 income statements related to this contract using the percentage-of-completion method? 3. Determine the amount of gross profit or loss to be recognized in each of the three years using the completed contract method. 4. Determine the amount of revenue, cost, and gross profit or loss to be recognized in each of the three years under IFRS, assuming that using the percentage-of- completion method is not appropriate. 5. Suppose the estimated costs to complete at the end of 2012 are \$80 million instead of \$60 million. Determine the amount of gross profit or loss to be recognized in 2012 using the percentage-of-completion method. Exercise 5­10 Requirement 1 (\$ in millions) 2011 2012 2013 Contract price \$220 \$220 \$220 Actual costs to date 40 120 170 Estimated costs to complete 120 60 - 0 - Total estimated costs 160 180 170 Estimated gross profit (actual in 2013) \$ 60 \$ 40 \$ 50 Gross profit (loss) recognition: 2011: \$40 = 25% x \$60 = \$15 \$160 2012: \$120 = 66.67% x \$40 = \$26.67 – \$15 = \$11.67 \$180 2013: \$220 – 170 = \$50 – (\$15 + 11.67) = \$23.33 Requirement 2 2011: \$220 x 25% = \$55 2012:\$220 x 66.67% = \$146.67 – 55 = \$91.67 2013:\$220 – 146.67 = \$73.33 Requirement 3 Year Gross profit (loss) recognized 2011 - 0 - 2012 - 0 - 2013 50 Total project income \$50 Requirement 4 2011: Revenue:  \$40 Cost:  \$40 Gross profit: \$  0 2012: Revenue: \$80 Cost:   \$80 Gross profit:  \$  0 2013: Revenue: \$100 (\$220 contract price – \$40 – \$80) Cost:   \$  50  Gross profit:  \$  50 Requirement 5 2012: \$120 = 60% x \$20* = \$12 – 15 = \$(3) loss \$200 *\$220 – (\$40 + 80 + 80) = \$20

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