Reference no: EM132429204

Question - In early 2019, Beertender Company entered into a long term contract to construct a bridge for Notsosober County for $10 million. The bridge will take three years to complete. In 2019, Beertender spent $2.8 million on the project, recognized $3.5 million in revenue and $.7 million in profit. In 2020, Beertender spent $4.2 million on the project, recognized $3.8 million in revenue and a $.4 million loss. Beertender billed Notsosober $3.0 million in 2019 and $4.5 million in 2020. Notsosober paid Beertender $2.6 million in 2019 and $4.3 million in 2020. Beertender Company recognizes revenue on all contracts over time, as the project is being completed by using the cost to cost approach.

1. When preparing its December 31, 2019 balance sheet, Beertender would report the following with regards to this contract:

A) Current Assets of $3.9 million, and Current Liabilities of $3.0 million.

B) Current Assets of $6.5 million, and no Current Liabilities.

C) Current Assets of $3.9 million, and no Current Liabilities.

D) Current Assets of $0.9 million, and no Current Liabilities.

2. When preparing its December 31, 2020 balance sheet, Beertender would report the following with regards to this contract:

A) Current Assets of $7.9 million, and Current Liabilities of $7.5 million.

B) Current Assets of $0.6 million, and Current Liabilities of $0.2 million.

C) Current Assets of $7.3 million, and Current Liabilities of $7.5 million.

D) Current Assets of $0.4 million, and no Current Liabilities.