Colorado Inc. constructed a factory during 2020 and 2021 under contract with Pacific MachineryCo. Relevant data are summarized below:Contract priceCostGross profitContract billings$3,000,00020201,200,0002021600,0002020800,0002021400,00020201,500,00020211,500,000Colorado Inc. recognizes revenue over time with respect to this contract. In its December 31,2020, balance sheet, Colorado would report:● The contract asset, cost and profit in excess of billings, $500,000.The contract liability, billings in excess of cost, of $300,000.The contract asset, contract amount in excess of billings, of $1,500,000.The contract asset, deferred profit, of $400,000.

Contract asset, cost and profit in excess of billings:Total contract price = $3,000,000Cost incurred…

Answered: Colorado Inc. constructed a factory…

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 9MC

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