Determine the amount of gross profit

Reference no: EM13298303

On June 15, 2006, Sanderson Constructionentered into a long-term construction contract to build a baseballstadium in Washington D.C. for $220 million. The expectedcompletion date is April 1 of 2008, just in time for the 2008baseball season. Cost incurred and estimated costs to complete atyear-end for the life of the contract are as follows ($ inmillions):

2006 2007 2008

Costs incurred during theyear $40 $80 $50

Estimated costs to complete as of 12/31 120 60 0

Required:

1. Determine the amount of gross profit or loss to berecognized in each of the three years using the percentage-of-completion method.

2. How much revenue will Sanderson report in its 2006 and 2007 income statements related to this contract using thepercentage-of-completion method?

3. Determine the amount of gross profit or loss to berecognized in each of the three years using the completed contract method.

4. Suppose the estimated costs to complete at the end of 2007are $80 million instead of $60 million. Determine the amount ofgross profit or loss to be recognized in 2007 using thepercentage-of-completion method.

Reference no: EM13298303

Questions Cloud

How to compute the final lengths and azimuths of lines : calculate departures and latitudes, misclosures in departures and latitude, and traverse relative precision. Balance the departures and latitude using the compass rule, and calculate coordinates of points B, C, and D.

Explain what mass, in g, of benzoic acid was burned : When a sample of benzoic acid was burned in a bomb calorimeter having a calorimeter constant of 12.5 kJ/oC, the temperature of the calorimeter (including its contents) rose from 23.18oC to 27.65oC. What mass, in g, of benzoic acid was burned

Estimate the cost of the receiveables loan to johnson : Estimate the cost of the receiveables loan to Johnson when the firm borrows the $300k. The prime rate is 11%.

Determine the speed at which the water leaves the hole : A large storage tank, open to the atmosphere at the top and filled with water, Determine the speed at which the water leaves the hole

Determine the amount of gross profit : How much revenue will Sanderson report in its 2006 and 2007 income statements related to this contract using the percentage-of-completion method?

Explain eccentric professor has a special request for coffee : Assume the eccentric professor has a daily special request for her coffee. She likes to have the 250.0 mL of coffee frozen at -15.0°C overnight and then want it heated to 95°C when she gets there in the morning.

Determine how far upstream of the section would be expected : The slope of the channel So=.15% and the Manning n=.038. Estimate the depth y2=100m upstream of a section where the flow depth y1=2.2m Using a) the direct integration method and b) the standard step method.

How much mechanical energy dissipates during this play : Two fun-loving otters are sliding toward each other on a muddy (and hence frictionless) horizontal surface. One of them, of mass 8.00kg, How much mechanical energy dissipates during this play

Determine the magnitude of the current in the bar : A magnetic field of 3 Tesla is oriented into the page. A 10 cm long conducting bar is pulled to the right at a constant speed of 3.4 m/s. What is the magnitude of the current in the bar

User Account

All Pages