A construction company entered into a fixed-price contract to build an office building for $44 million. Construction costs incurred during the first year were $14 million and estimated costs to complete at the end of the year were $21 million. The building was completed during the second year. Construction costs incurred during the second year were $22 million. How much revenue and gross profit or loss will the company recognize in the first and second year if it recognizes revenue upon contract completion?

A construction company entered into a fixed-price contract to build an office building for $44 million. Construction costs incurred during the first year were $14 million and estimated costs to complete at the end of the year were $21 million. The building was completed during the second year. Construction costs incurred during the second year were $22 million. How much revenue and gross profit or loss will the company recognize in the first and second year if it recognizes revenue upon contract completion?

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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