applier Corp. enters into a government contract during the year to provide computer equipment for $2.000,000. The contract consists of a single performance obligation to ovide specified equipment in three years. Total costs estimated by Supplier Corp. for the contract are $1,400,000. The equipment is highly specialized and has no ternative uses. As negotiated in the contract, any costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp, in the event of a contract ancellation. Actual costs incurred during the first year of the contract were $640,000 including unexpected cost overruns of $80,000 due to labor inefficiencies. ssume that at the end of the second year of the contract, the estimate of total costs has increased to $1,500,000 million due to an increase in cost of materials. Actual costs curred to date are $1,125,000, excluding year one inefficiencies. Calculate (1) recognized revenue. (2) the gross profit, and (3) adjusted contract margin to be recorded in the second year of the contract. 1 Recognized revenue 2 Gross profit 3 Adjusted contract margins b. Calculate (1) cumulative recognized revenue, (2) cumulative gross profit, and (3) cumulative adjusted contract margin at the end of the second year of the contract. 1 Cumulative recognized revenice S 2 Cumulative gross profic 1 3 Cumulative adjusted contract margins
applier Corp. enters into a government contract during the year to provide computer equipment for $2.000,000. The contract consists of a single performance obligation to ovide specified equipment in three years. Total costs estimated by Supplier Corp. for the contract are $1,400,000. The equipment is highly specialized and has no ternative uses. As negotiated in the contract, any costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp, in the event of a contract ancellation. Actual costs incurred during the first year of the contract were $640,000 including unexpected cost overruns of $80,000 due to labor inefficiencies. ssume that at the end of the second year of the contract, the estimate of total costs has increased to $1,500,000 million due to an increase in cost of materials. Actual costs curred to date are $1,125,000, excluding year one inefficiencies. Calculate (1) recognized revenue. (2) the gross profit, and (3) adjusted contract margin to be recorded in the second year of the contract. 1 Recognized revenue 2 Gross profit 3 Adjusted contract margins b. Calculate (1) cumulative recognized revenue, (2) cumulative gross profit, and (3) cumulative adjusted contract margin at the end of the second year of the contract. 1 Cumulative recognized revenice S 2 Cumulative gross profic 1 3 Cumulative adjusted contract margins
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 18RE
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT