4 build a baseball stadium in Washington, On June 15, 2018, Sanderson Constructi

Question

4 build a baseball stadium in Washington, On June 15, 2018, Sanderson Construction entered into a long-term construction contract to D C, for $360 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 (S in millions) 2818 2019 2820 S 38 $148 $40 010830 Costs incurred during the year Estimated costs to complete as of December 31 170 88 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 e the revenue and 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 $170 million insteed of $80 millilon. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. t zn te percemtage of cempl Complete this question by entering your answers in the tabs below

Explanation / Answer

3.

1 Amount (in million $) Particulars 2018 2019 2020 a. Cost Incurred 30 140 40 b. cumulative cost 30 170 210 c. Further estimated cost to complete 170 80 - d. Estimated contract cost 200 250 210 e. contract revenue 360 360 360 f. Percentage of completion (b/d) 15.00% 68.00% 100.00% g. Comulative Revenue 54 244.8 360 h. Revenue to be recognised 54 190.8 115.2 i. Gross Profit to be recognised (h-a) 24 50.8 75.2 2 Amount (in million $) Particulars 2018 2019 2020 a. Cost Incurred 30 140 40 b. cumulative cost 30 170 210 c. Further estimated cost to complete 170 80 - d. Estimated contract cost 200 250 210 e. contract revenue 360 360 360 f. Percentage of completion (b/d) 0.00% 0.00% 100.00% g. Comulative Revenue 0 0 360 h. Revenue to be recognised 0 0 360 i. Gross Profit to be recognised (h-a) -30 -140 320

3.

3 Amount (in million $) Particulars 2018 2019 a. Cost Incurred 30 140 b. cumulative cost 30 170 c. Further estimated cost to complete 170 170 d. Estimated contract cost 200 310 e. contract revenue 360 360 f. Percentage of completion (b/d) 15.00% 54.84% g. Comulative Revenue 54 197.4194 h. Revenue to be recognised 54 143.4194 i. Gross Profit to be recognised (h-a) 24 3.419355

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