At the beginning of 2021, the Harding Construction Company received a contract to build an office building for $5 million. Harding will construct the building according to specifications provided by the buyer, and the project is estimated to take three years to complete. According to the contract, Harding will bill the buyer in installments over the construction period according to a prearranged schedule. Information related to the contract is as follows: 2021 2022 2023 Construction costs incurred during the year $1,500,000 $1,000,000 $1,600,000 Construction costs incurred in prior years 1,500,000 2.500,000 Cumulative actual construction costs $1,500,000 $2.500,000 $4,100,000 Estimated costs to complete at end of year 2,250,000 1,500,000 Total estimated and actual construction costs $3,750,000 $4,000,000 $4,100,000 Billings made during the year $1,200,000 $2.,000,000 $1,800,000 Cash collections during the year 1,000.000 1,400,000 2.600,000 Assume the company recognizes revenue from long-term contracts over time based on the perocentage of completion. How much gross profit from long-term contracts should the company recognize in 2023? O $325,000 O $300,000 O $275,000 O $250,000

At the beginning of 2021, the Harding Construction Company received a contract to build an office building for $5 million. Harding will construct the building according to specifications provided by the buyer, and the project is estimated to take three years to complete. According to the contract, Harding will bill the buyer in installments over the construction period according to a prearranged schedule. Information related to the contract is as follows: 2021 2022 2023 Construction costs incurred during the year $1,500,000 $1,000,000 $1,600,000 Construction costs incurred in prior years 1,500,000 2.500,000 Cumulative actual construction costs $1,500,000 $2.500,000 $4,100,000 Estimated costs to complete at end of year 2,250,000 1,500,000 Total estimated and actual construction costs $3,750,000 $4,000,000 $4,100,000 Billings made during the year $1,200,000 $2.,000,000 $1,800,000 Cash collections during the year 1,000.000 1,400,000 2.600,000 Assume the company recognizes revenue from long-term contracts over time based on the perocentage of completion. How much gross profit from long-term contracts should the company recognize in 2023? O $325,000 O $300,000 O $275,000 O $250,000

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 15RE: GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells...

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GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells the FB7 model for 62,000, and this price includes one year of secure parking storage. GameDay also sell secure parking storage separately for 8,000 per year, and customers can purchase the FB7 model without secure parking storage for 60,000. If a customer purchases the FB7 model with secure parking storage, how should GameDay allocate the transaction price?