Compute the gross profit to be recognised

Reference no: EM132765819

Question - Doxton Company commences the construction of a museum on 1 July 2018. It signs a fixed-price contract for total revenue of $190 million. The project is expected to be completed by the end of June 2021. The expected cost at the commencement of construction was $170 million. The expected costs to complete the construction project can change throughout the project. The following data relates to the project:

	2019 ($M)	2020 ($M)	2021 ($M)
Costs for the year	50	60	50
Costs incurred to date	50	110	160
Estimated costs to complete	120	60	-
Progress billings during the year	40	80	70
Cash collected during the year	35	80	75

The contract is completed as expected on 30 June 2021. Poweron Construction Company uses the percentage-of-completion method to account for its construction contract.

REQUIRED -

a. Compute the gross profit to be recognised for each of the three years.

b. Provide the journal entries for each year. Assume the stage of completion can be reliably determined. Exclude journal narrations.

c. Prepare the journal entries for each year assuming the stage of completion and the outcome of the construction contract cannot be reliably estimated. Show the differences from b) only. Exclude journal narrations.

Reference no: EM132765819

Questions Cloud

Explain primate evolution from a common ancestor : Explain primate evolution from a common ancestor?

MBA 515 Business Environment, Innovations, Entrepreneurship : MBA 515 - Business Environment, Innovations, and Entrepreneurship Assignment Help and Solution - Southern New Hampshire University, USA - Homework Help

What amount of compensation expense recognized for golf view : Fair value per option before the modification of ?100 to ?120 after the modification. What amount of compensation expense shall be recognized in 20x1?

What is the amount of cash that should be received : A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom, FOB shipping point with prepaid freight of $900 added to the.

Compute the gross profit to be recognised : Prepare the journal entries for each year assuming the stage of completion and the outcome of the construction contract cannot be reliably estimated.

What the share capital as compared to the share capital : Equipment cannot be determined reliably. The share capital, as compared to the share capital when the fair value of the equipment is ?32,000, would

Prepare journal entry to record the impairment : JJ Company determined that due to obsolescence, an equipment with an original cost of P4,500,000 and accumulated depreciation on January 1, 2019 of P2, 100,000.

What the journal entry on march would include a : What journal entry on March 10, 20x1 would include a? On January 1, 20x1, Monteverde Co. contracted XYZ & Co., CPAs for an outsourced internal audit engagement

How much is the salaries expense on dec for abc co : Over the three-year period from 15 to 12 employees. During 20x3, additional 5 employees left. How much is the salaries expense on Dec. 31, 20x3?

User Account

All Pages