Reference no: EM131119198
On January 1, 2010, Turner Construction Company agreed to construct an observatory for Dartmouth College for $120 million. Dartmouth College must pay $30 million upon signing and $30 million at the end of 2010, 2011, and 2012. Expected construction costs are $10 million for 2010, $60 million for 2011, and $30 million for 2012. Assume that these cash flows occur at the end of each year. Also assume that an appropriate interest rate for this contract is 10 percent. Amortization schedules for the deferred cash flows follow.
Required
a. Indicate the amount and nature of income (revenue and expense) that Turner would recognize during 2010, 2011, and 2012 if it uses the completed-contract method. Ignore income taxes.
b. Repeat Part a using the percentage-of-completion method.
c. Repeat Part a using the installment method.
d. Indicate the balance in the construction in process account on December 31, 2010, 2011, and 2012 (just prior to completion of the contract) under the completed-contract and the percentage-of-completionmethods.
|
What is the role of ethics officer within organization
: What is the role of an ethics officer within an organization? What are his or her duties? To whom does the FSGO guidelinesrecommend that the ethics officer report?
|
|
What methods are used in practice to determine
: What methods are used in practice to determine the extent of progress toward completion? Identify some "input measures" and some "output measures" that might be used to determine the extent of progress.
|
|
Find an example of green product and service
: Find an example of a “green” product/service. Discuss the current value proposition of the product. What is the company doing right in marketing its product? What is it doing wrong? What suggestions would you provide to the company to change the valu..
|
|
Upper and lower control limits for appropriate control chart
: Red Top Company receives several complaints per day about the behavior of its drivers. Over a 9-day period (where days are the unit of measure), the owner received the following number of complaints from irate passengers: 3, 0, 8, 9, 6, 7, 4, 9, 8 fo..
|
|
Repeat part a using the installment method
: Indicate the amount and nature of income (revenue and expense) that Turner would recognize during 2010, 2011, and 2012 if it uses the completed-contract method. Ignore income taxes. Repeat Part a using the percentage-of-completion method. Repeat Part..
|
|
Measuring the number of unsatisfied delivery customers
: A local newspaper has been measuring the number of unsatisfied delivery customers for the past few weeks utilizing a survey. Below is a table with the number of unsatisfied customers for the past 4 weeks. Using a confidence interval of two standard d..
|
|
For what reasons should the percentage of completion method
: For what reasons should the percentage-of-completion method be used over the completed-contract method whenever possible?
|
|
Replace the existing process with the new process
: Crunchy Potato Chip Company packages potato chips in a process designed for 10 oz of chips. The weight of the bag cannot be more than ± 0.5 from the process mean. You have just designed a new process for filling the chip bags. The new process results..
|
|
How much revenue and gross profit should hawkins recognize
: Hawkins Construction Co. appropriately uses the percentage-of completion method. How much revenue and gross profit should Hawkins recognize in the first year of the project?
|