How much revenue can Balfour Beatty recognize

Assignment Help Financial Accounting
Reference no: EM132803987

Question - Balfour Beatty won the contract to build the Aquatics Centre for the 2020 Olympics. Assume the following about this long-term contract: The Olympic Development Authority agreed to pay Balfour Beatty £400 million for this construction, which is expected to be completed on Dec 31, 2019. Balfour Beatty estimates the total cost to be £240 million. The Olympic Development Authority will make the following cash payments to Balfour Beatty: £100 million in 2016, £100 million in 2017, £100 million in 2018, and £100 million in 2019. Balfour Beatty started to work on the contract on January 1, 2016 (first day of its 2016 fiscal year) and it incurred £80 million of actual costs in 2016 and £60 million of actual costs in 2017. Before Balfour Beatty recognized revenue for 2017, it revised its total cost estimate to £260 million, but the actual costs for 2018 and 2019 eventually amounted to £130 million. The contract was completed at the end of 2019 as scheduled. Balfour Beatty uses the percentage-of-completion method to recognize revenues from long-term contracts. Ignore taxes.

1. How much revenue can Balfour Beatty recognize from the Olympic Aquatics Centre contract in 2016?

2. How much revenue can Balfour Beatty recognize from the Olympic Aquatics Centre contract in 2017?

3. How much revenue can Balfour Beatty recognize from the Olympic Aquatics Centre contract in total?

4. Had Balfour Beatty used the completed contract method (instead of the percentage-of-completion method as stated in the earlier instructions), how much more (or less) total net income (ignoring taxes) would it have reported over the whole contract period?

Reference no: EM132803987

Questions Cloud

Calculate the total fees you have paid on loan commitment : If you take down 90 percent of the total loan commitment, calculate the total fees you have paid on this loan commitment
How you ever navigated a career pivot successfully : What was your personal experience and what were your strategies? What advice would you give for anyone else trying to make a career pivot?
Compare and contrast theories of maslow and alderfer : How would you advise a Canadian manager looking to apply these theories in their workplace, what specific advice or guidance would you give them?
Which is not correct after the declaration of a share split : Share Premium, P120,000; and Retained Earnings P1,200,000 Which of the following is not correct after the declaration of a 2-for-1 share split?
How much revenue can Balfour Beatty recognize : The contract was completed at the end of 2019 as scheduled. How much revenue can Balfour Beatty recognize from the Olympic Aquatics Centre contract in 2016
Access an internal issue resolution procedure : Where can you access an INTERNAL Issue Resolution Procedure? Where can you access an EXTERNAL Issue Resolution Procedure?
Solve the odes from part b for the hydrocarbon concentration : Plot the mole fractions of ethane and ethylene as a function of length out to 95 meters - What would you change in order to maximize the selectivity
What factors would a beverage manager consider : What factors would a beverage manager consider when determining the type of hardware and software that best suits their operating environment during a service?
Define effective marketing tool for marketing professionals : Review the article, Effective Marketing Tool for the Marketing Professionals in Healthcare Organization: The 4 ‘S' Model. Are there any elements.

Reviews

Write a Review

Financial Accounting Questions & Answers

  First-out method is used to cost inventories was

Department A had 1,000 units in Work in Process that were 60% completed at the beginning of the period at a cost of $7,000. During the period, 4,000 units of direct materials were added at a cost of $8,200, and 4,500 units were completed. At the end ..

  What could be the sales budget for march

The planned selling price is $150 per unit. What could be the sales budget for March?

  Summary of financial statement notes for both burger king

Short summary (approximately a page) of financial statement notes for both Burger King & Tim Horton's. Summary of the results of the financial ratios for both companies.

  How much will the president earn at a sales level

Cambridge Company's president receives a $150,000 base salary and a bonus of 0.5% of sales for the year. How much will the president earn at a sales level of $3,000,000 for the year?

  Post the transactions into t-accounts

Post the following transactions into T-accounts. February 25 Paid cash to the supplier for the February 1 purchase of supplies $800

  Preparing a cash budget-cash disbursements

A Company is preparing a cash budget for June. The company has $107,200 cash at the beginning of June and anticipates $131,770 in cash receipts and $149,560 in cash disbursements during June. This company has an agreement with its bank to maintain a ..

  Accounted for in ariba government all type funds

What amount of the foregoing revenues should be accounted for in Ariba's government all type funds?

  Is there any time where a corporation can deduct losses

is there any time where a corporation can deduct losses incurred from an early sale of an investment against first

  Determine the liability that would be recorded

The Jenkins Corporation has purchased an executive jet. The company has agreed to pay $200,500 per year for the next 10 years and an additional $2,005,000 at the end of the 10th year. The seller of the jet is charging 8% annual interest. Determine th..

  Compute the net invoice amounts

Compute the amount to be paid for each of the four separate invoices assuming that all invoices are paid within the discount period.

  What is the formula to determine the effective interest rate

An important source of temporary cash is trade credit, which does not actually bring in cash, but instead slows its outflow. Vendors often provide discounts for early payment. What is the formula to determine the effective interest rate if the dis..

  James corporation is planning to issue bonds

The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds will be sold on January 1 of this year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd