Compute the amount of gross profit or loss

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Question - Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2013 and was completed in 2014. Data relating to the contract are summarized below:


2013

2014

Costs incurred during the year

$300,000

$1,575,000

Estimated costs to complete as of 12/31

1,200,000

0

Billings during the year

380,000

1,620,000

Cash collections during the year

250,000

1,750,000

Required:

1. Compute the amount of gross profit or loss to be recognized in 2013 and 2014 using the percentage-of-completion method.

2. Compute the amount of gross profit or loss to be recognized in 2013 and 2014 using the completed contract method.

3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2013 using the percentage-of-completion method.

4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2013 using the completed contract method.

Reference no: EM132001248

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