18) On January 1, 2015, Ziggy decided to sell the rock crusher for $30,000. If Z

Question

18) On January 1, 2015, Ziggy decided to sell the rock crusher for $30,000. If Ziggy was using machine hours as the depreciation method what would be the gain or (loss) on the sale of equipment? (Write your answer on the answer sheet.) 0 5 20 30000 24 IS2o In 2012, Omega Construction began work on a contract with a price of $110,000 and estimated costs of $100,000. Data for each year of the contract are as follows: 2013 $40,000 20,000 40,000 35,000 2014 $25,000 Costs incurred during the year Estimated costs to complete Partial billings Collections 2012 S40,000 60,000 30,000 25,000 30,000 40,000 19) Under the percentage-of-completion method of revenue recognition, gross profit in 2012 would be a.) $4,000 /b: $4,400 c. $3,000 60,000 Page 3 of 8

Explanation / Answer

19) Percentage of completion = $40,000 / ($40,000 + $60,000)

................................................= 40%

Gross Profit = ( 40% x $110,000) - $40,000

....................= $4,000

Hence the correct Answer is Option A i.e. $4,000.

20) Percentage of completion = ( $40,000 + $40,000 ) / ($40,000 + $40,000 + $20,000)

.................................................= 80%

Gross Profit = [( 80% x $110,000) - $80,000] - $4,000

....................= $4,000

Hence the correct Answer is Option A i.e. $4,000.

21) Gross Profit = [ $110,000 - $105,000 ] - ($4,000 + $4,000)

..........................= $(3,000)

Hence the correct Answer is Option C i.e. $(3,000).

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