Carla Vista Construction Company uses the percentage-of-completion method of accounting. In 2025, Carla Vista began work undercontract #E2-D2, which provided for a contract price of $2,219,000. Other details follow:Costs incurred during the yearEstimated costs to complete, as of December 31Billings during the yearCollections during the year(a)Your answer is correct.Revenue recognized in 2025Revenue recognized in 2026$2025$620,490970,510$428,000350,000What portion of the total contract price would be recognized as revenue in 2025? In 2026? (Do not round intermediate calculations.)865,41020261,353,590$1,429,000-0-1,699,0001,471,000 Assuming the same facts as those above except that Carla Vista uses the cost-recovery method of accounting, what portion of thetotal contract price would be recognized as revenue in 2026?Revenue recognized in 2026tA$2,219,000

Computation of % of completion, revenue recognition and Gross Profit - Carla Vista Construction…

contract #E2-D2, which provided for a contract price of $2,219,000. Other details follow: Costs incurred during the year Estimated costs to complete, as of December 31 Billings during the year Collections during the year 2025 $620,490 970,510 428,000 350,000 2026 $1,429,000 -0- 1,699,000 1,471,000

contract #E2-D2, which provided for a contract price of $2,219,000. Other details follow: Costs incurred during the year Estimated costs to complete, as of December 31 Billings during the year Collections during the year 2025 $620,490 970,510 428,000 350,000 2026 $1,429,000 -0- 1,699,000 1,471,000

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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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

Carla Vista Construction Company uses the percentage-of-completion method of accounting. In 2025, Carla Vista began work under
contract #E2-D2, which provided for a contract price of $2,219,000. Other details follow:
Costs incurred during the year
Estimated costs to complete, as of December 31
Billings during the year
Collections during the year
(a)
Your answer is correct.
Revenue recognized in 2025
Revenue recognized in 2026
$
2025
$620,490
970,510
$
428,000
350,000
What portion of the total contract price would be recognized as revenue in 2025? In 2026? (Do not round intermediate calculations.)
865,410
2026
1,353,590
$1,429,000
-0-
1,699,000
1,471,000

Assuming the same facts as those above except that Carla Vista uses the cost-recovery method of accounting, what portion of the
total contract price would be recognized as revenue in 2026?
Revenue recognized in 2026
tA
$
2,219,000

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