AC302-Unit4ExcelTemplate

AC302-Unit4ExcelTemplate - The Smith Construction Company...

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Unformatted text preview: The Smith Construction Company received a contract on September 30, 2010 to build a warehouse over a period of 18 months. The contract price was $600,000 and the estimated cost to build was $400,000. The actual (and estimated) costs incurred and the payments made by the purchaser are as follows: Costs Payments September 30December 31, 2010 $120,000 $90,000 January 1December 31, 2011 240,000 210,000 January 1March 31, 2012 40,000 300,000 Required 1. Compute the amount of revenue, expense, and gross profit each year for each of the following a. Revenue recognition at the time of sale (completion) b. Revenue recognition during production c. Revenue recognition at the time of cash receipt d. Cost recovery (compute only the gross profit) 2. Which method provides the most useful information to users? Under what circumstances would the other methods provide more useful information? E18-1 Revenue Recognition Alternatives methods (enter zero where necessary) : Name: An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Compute the amount of revenue, expense, and gross profit each year for each of the following a. Revenue recognition at the time of sale (completion) Revenue Expense Gross Profit 2010 2011 2012 b. Revenue recognition during production Revenue Expense Gross Profit 2010 2011 2012 c. Revenue recognition at the time of cash receipt Revenue Expense Gross Profit 2010 2011 2012 d. Cost recovery (compute only the gross profit) Gross Profit 2010 2011 2012 2. Which method provides the most useful information to users? Under what circumstances would the other methods provide more useful information? Complete the paragraph above by selecting the word, number, or phrase that best fits the corresponding number (you may use an answer more than once). (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) E18-1 Revenue Recognition Alternatives methods (enter zero where necessary) : In the situation of a (1) construction contract, recognition of (2) during production is generally the most useful, if the criteria discussed in the chapter are met (reasonably dependable (3) can be made, the contract specifies the (4) rights, and the buyer and seller can be expected to satisfy their (5) ). The method produces a better (6) of the (7)-producing activities of the company each period and an asset (8) at the (9) price of the portion of the (10) that has been completed. The recognition of (11) at the time of sale ( (12) (13) ) would be appropriate when there is (14) (15) about the earning process being completed (i.e., when the criteria are not met). The recognition of revenue in the period of cash (16) would be appropriate only if there is (17) (18) about the (19) of the (20) . Name: Solutions An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still gettingAn asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s)....
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AC302-Unit4ExcelTemplate - The Smith Construction Company...

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