Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,120,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date. Estimated costs to complete Billings to Axelrod, to date Required: At 12-31-2024 10% $ 361,000 3,249,000 722,000 At 12-31-2025 At 12-31-2026 60% 100% $2,604,000 1,736,000 2,210,000 $4,392,000 4,120,000 0 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs.
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,120,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows: Percentage of completion Costs incurred to date. Estimated costs to complete Billings to Axelrod, to date Required: At 12-31-2024 10% $ 361,000 3,249,000 722,000 At 12-31-2025 At 12-31-2026 60% 100% $2,604,000 1,736,000 2,210,000 $4,392,000 4,120,000 0 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years. 3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 6-12 (Algo) Long-term contract; revenue recognized over time vs. upon project completion; loss projected on entire project [LO6-9]
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take
between two and three years to complete the project. The total contract price for construction of the building is $4,120,000. The building was completed on December 31, 2026. Estimated percentage of completion,
accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows:
Percentage of completion
Costs incurred to date
Estimated costs to complete
Billings to Axelrod, to date
Required:
At 12-31-2024
At 12-31-2025
At 12-31-2026
10%
60%
100%
$ 361,000
3,249,000
722,000
$ 2,604,000
1,736,000
2,210,000
$ 4,392,000
0
4,120,000
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time.
2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or
billings in excess of costs.
Complete this question by entering your answers in the tabs below.
Req 1 and 2
Req 3
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that
the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according
to percentage of completion, compute gross profit or loss to be recognized in each of the three years.
Note: Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.
Show less A
Req 1
Req 2
Year
Gross Profit (Loss) Recognized
("Upon Completion")
Gross Profit (Loss) Recognized
("Over Time")
2024
$
51,000
2025
$
(220,000)
$
(1,830,000)
2026
$
Total project profit (loss)
$
(52,000) $
(272,000) $
(1,400,000)
(3,179,000)
< Req 1 and 2
Req 3 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe428917a-86ab-4ae4-9768-87e25ad9f8d4%2Fe9188443-76ab-4e58-a1f3-a448d0d2d25a%2Fk495yuk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 6-12 (Algo) Long-term contract; revenue recognized over time vs. upon project completion; loss projected on entire project [LO6-9]
Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take
between two and three years to complete the project. The total contract price for construction of the building is $4,120,000. The building was completed on December 31, 2026. Estimated percentage of completion,
accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows:
Percentage of completion
Costs incurred to date
Estimated costs to complete
Billings to Axelrod, to date
Required:
At 12-31-2024
At 12-31-2025
At 12-31-2026
10%
60%
100%
$ 361,000
3,249,000
722,000
$ 2,604,000
1,736,000
2,210,000
$ 4,392,000
0
4,120,000
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time.
2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or
billings in excess of costs.
Complete this question by entering your answers in the tabs below.
Req 1 and 2
Req 3
1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that
the contract does not qualify for revenue recognition over time. 2. Assuming Curtiss recognizes revenue over time according
to percentage of completion, compute gross profit or loss to be recognized in each of the three years.
Note: Leave no cells blank - be certain to enter "0" wherever required. Loss amounts should be indicated with a minus sign.
Show less A
Req 1
Req 2
Year
Gross Profit (Loss) Recognized
("Upon Completion")
Gross Profit (Loss) Recognized
("Over Time")
2024
$
51,000
2025
$
(220,000)
$
(1,830,000)
2026
$
Total project profit (loss)
$
(52,000) $
(272,000) $
(1,400,000)
(3,179,000)
< Req 1 and 2
Req 3 >
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