Reference no: EM132514550

Question - On June 15, 2021, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $390 million. The expected completion date is April 1, 2023, just in time for the 2023 baseball season. Costs incurred and estimated costs to be made at year-end for the life of the contract are as follows ($ in millions):

	2021	2022	2023
Costs incurred during the year	$60	$130	$70
Estimated costs to be made as of December 31	190	60	-

Required -

1. Please help me compute the revenue and gross profit will Sanderson report in its 2021, 2022, and 2023 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion.

2. Help me compute the revenue and gross profit will Sanderson report in its 2021, 2022, and 2023 income statements related to this contract assuming this project does not qualify for revenue recognition over time.

3. Suppose the estimated costs to be finished by the end of 2022 are $190 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2022 assuming Sanderson recognizes revenue over time according to percentage of completion.