Colorado Construction Co., a private company that reports under ASPE, was contracted by aprovincial government to build a bridge over a river. The government owns the land on bothsides of the river and it agreed to pay Colorado a fixed fee of $29,750,000 for the bridge.Colorado initially estimated the cost to build the bridge to be $21,500,000. Colorado's year endis December 31. Work began under the contract on July 1, 2019 and was completed onSeptember 30, 2021. Construction activities are summarized below by year:Estimated costs toAmountduring the year collected duringthe yearYearConstruction costsProgress billingsincurred duringthe yearcomplete (excludesalready incurred costs2019$8,250,000$13,000,000$10,000,000$12,000,000202012,000,0005,000,00010,000,0006,000,00020215,250,0009,750,00011,750,000Required:a. Provide the journal entries that Colorado would have to record for each year of thebridge contract. Use costs to determine the percentage of completion each year. Showyour calculationsb. Provide the balances that would be shown on the balance sheet and the incomestatement for this contract for each year.c. Now assume that at the end of 2020 Colorado estimated that the cost to complete thebridge project was $10 million instead of $5 million. What journal entries would berequired for 2020 and 2021?

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Colorado Construction Co., a private company that reports under ASPE, was contracted by a provincial government to build a bridge over a river. The government owns the land on both sides of the river and it agreed to pay Colorado a fixed fee of $29,750,000 for the bridge. Colorado initially estimated the cost to build the bridge to be $21,500,000. Colorado's year end is December 31. Work began under the contract on July 1, 2019 and was completed on September 30, 2021. Construction activities are summarized below by year: Year Construction costs Estimated costs to Progress billings during the year collected during Amount incurred during complete (excludes already incurred costs the year the year 2019 $8,250,000 $13,000,000 $10,000,000 $12,000,000 2020 12,000,000 5,000,000 10,000,000 6,000,000 2021 5,250,000 9,750,000 11,750,000

Colorado Construction Co., a private company that reports under ASPE, was contracted by a provincial government to build a bridge over a river. The government owns the land on both sides of the river and it agreed to pay Colorado a fixed fee of $29,750,000 for the bridge. Colorado initially estimated the cost to build the bridge to be $21,500,000. Colorado's year end is December 31. Work began under the contract on July 1, 2019 and was completed on September 30, 2021. Construction activities are summarized below by year: Year Construction costs Estimated costs to Progress billings during the year collected during Amount incurred during complete (excludes already incurred costs the year the year 2019 $8,250,000 $13,000,000 $10,000,000 $12,000,000 2020 12,000,000 5,000,000 10,000,000 6,000,000 2021 5,250,000 9,750,000 11,750,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 88P

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