Compute the amount of revenue and gross profit or loss

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Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,810,000. The project began in 2016 and was completed in 2017. Data relating to the contract are summarized below:

 

2016

2017

Costs incurred during the year

$ 368,000

$ 2,205,000

Estimated costs to complete as of 12/31

1,472,000

0

Billings during the year

525,000

1,790,000

Cash collections during the year

284,000

1,835,000

Required:

Compute the amount of revenue and gross profit or loss to be recognized in 2016 and 2017 assuming Nortel recognizes revenue over time according to percentage of completion.

Reference no: EM131557931

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