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E 5-9 Long-term contract; percentage-of-completi...

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Question

E 5-9 Long-term contract; percentage-of-completion and completed contract methods LO4 Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2011 and was completed in 2012. Data relating to the contract are summarized below: 2009 2010 costs incurred during the year $300,000 $1,575,000 estimated costs to complete as12/31 1,200,000 0 billings during the year 380,000 1,620,000 cash collections during the year 250,000 1,750,000 Required: 1. Compute the amount of gross profit or loss to be recognized in 2011 and 2012 using the percentage-of-completion method. 2. Compute the amount of gross profit or loss to be recognized in 2011 and 2012 using the completed contract method. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2011 using the percentage-of-completion method. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2011 using the completed contract method.

 

Paper#12904 | Written in 18-Jul-2015

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