Current Attempt in Progress Sunland Construction Company began operations on January 1, 2023. During the year, Sunland entered into a non-cancellable contract with Novak Corp. to construct a manufacturing facility. At that time, Sunland estimated that it would take five years to complete the facility at a total cost of $4,533,000. The total contract price for construction of the facility is $6,019,000. During the year, Sunland incurred $1,143,030 in construction costs related to the project. The estimated cost to complete the contract is $4,299,970. Novak was billed and paid 25% of the contract price. The billings are non-refundable. Prepare schedules to calculate the amount of gross profit to be recognized for the year ended December 31, 2023, and the amount to be shown as contract assets or liabilities at December 31, 2023, under each of the following methods. (a) Completed-contract method. Sunland Construction Company Computation of Contract Liability $ $

Current Attempt in Progress Sunland Construction Company began operations on January 1, 2023. During the year, Sunland entered into a non-cancellable contract with Novak Corp. to construct a manufacturing facility. At that time, Sunland estimated that it would take five years to complete the facility at a total cost of $4,533,000. The total contract price for construction of the facility is $6,019,000. During the year, Sunland incurred $1,143,030 in construction costs related to the project. The estimated cost to complete the contract is $4,299,970. Novak was billed and paid 25% of the contract price. The billings are non-refundable. Prepare schedules to calculate the amount of gross profit to be recognized for the year ended December 31, 2023, and the amount to be shown as contract assets or liabilities at December 31, 2023, under each of the following methods. (a) Completed-contract method. Sunland Construction Company Computation of Contract Liability $ $

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 19RE

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JPIA Company began operations on January 2, 2021. During the year, the company entered into a contract with PUP Company to construct a manufacturing facility. At that time JPIA estimated that it would take five years to complete the facility at a cost of P4,812,500. The total contract price for the construction of the facility is P5,468,750. During the year, the company incurred P962,500 in construction costs related to the construction project. At year end, the total estimated cost to complete the contract is P4,375,000. PUP was billed and paid 30% of the contract price subject to a 10% retention. Using the percentage of completion method, how much is Contract Liability to be presented in the Statement of Financial Position for the year just ended?
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