Calculate the amount of revenue to be recognized

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Problem - Vaughan Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd. The contract is a non-cancellable fixed price contract for $9.7 million. The following data pertain to the construction period (all figures in thousands).

 

2020

2021

2022

Costs for the year

4100

5000

800

Estimated costs to complete

5000

900

0

Progress billings

3800

4400

1500

Cash collected

3300

4500

1900

Required -

a) Calculate the amount of revenue to be recognized in 2020 and 2021.

b) Calculate the construction costs to be expensed in 2021.

c) Prepare the journal entry at December 31, 2021, to record long-term contract revenues, expenses, and losses for 2021.

d) What is the balance in the Contract Asset/Liability account at December 31, 2020 and 2021?

Reference no: EM132710593

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