What portion of the total contract price is recognized as

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1. Discuss the revenue principle and the matching principle as per the generally accepted accounting principles (GAAP).

2. Contrast the percentage-of-completion method of revenue recognition versus the completed contract method.

3. Solve this accounting problem for the ABC grocery company relating to revenue and expense recognition as per GAAP: ABC Corporation uses the percentage-of-completion method of accounting. In 2010, ABC entered into a contract for a contract price of $2,000,000.

2010
Costs incurred during the year
600,000

Estimated costs to complete as of Dec 31
900,000

Billings during the year
400,000

Collections during the year
300,000

1. What portion of the total contract price is recognized as revenue in 2010?
2. What is the profit recognized for 2010?
3. Prepare the journal entries for 2010 under the percentage completion method.

Reference no: EM13599371

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