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5 calculate the amount of gross profit loss to be

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5. Calculate the amount of gross profit (loss) to be recognized in each of the three years, assuming the followingcosts incurred and costs to complete information.(Do not round intermediate calculations.)0
Explanation:1.201320142015Contractprice$10,000,000$10,000,000$10,000,000Actualcoststodate2,400,0006,000,0008,200,000Estimatedcoststocomplete5,600,0002,000,0000Totalestimatedcosts8,000,0008,000,0008,200,000Estimatedgrossprofit(loss)(actualin2015)$2,000,000$2,000,000$1,800,00013
Gross profit (loss) recognition:2013:$2,400,000= 30.0% × $2,000,000 = $600,000$8,000,0002014:$6,000,000= 75.0% × $2,000,000 = $1,500,000 – 600,000 = $900,000$8,000,0002015: $1,800,000 – 1,500,000 = $300,0002.201320142015Revenue from long-term contracts (1)3,000,0004,500,0002,500,000(1)Revenuerecognized:2013:30% ×$10,000,000$3,000,0002014:75% ×$10,000,000$7,500,000Less:Revenuerecognized in 2013(3,000,000)Revenuerecognized in 2014$4,500,00014
2015:100% ×$10,000,000$10,000,000Less:Revenuerecognized in 2013& 2014(7,500,000)Revenuerecognized in 2015$2,500,0004.201320142015Contractprice$10,000,000$10,000,000$10,000,000Actualcoststodate2,400,0006,200,0009,400,000Estimatedcoststocomplete5,600,0003,100,0000Totalestimatedcosts8,000,0009,300,0009,400,000Estimatedgrossprofit(loss)(actualin$ 2,000,000$ 700,000$ 600,00015
2015)Gross profit (loss) recognition:2013:$2,400,000= 30.0% × $2,000,000 = $600,000$8,000,0002014:$6,200,000= 66.6667% × $700,000 = $466,667 – 600,000 = $(133,333)$9,300,0002015: $600,000 – 466,667 = $133,3335.201320142015Contractprice$10,000,000$10,000,000$10,000,000Actualcoststodate2,400,0006,200,00010,100,000Estimatedcoststocomplete5,600,0004,100,0000Totalestimatedcosts8,000,00010,300,00010,100,000Estimatedgrossprofit(loss)(actual$ 2,000,000$ (300,000)$ (100,000)16
in2015)Gross profit (loss) recognition:2013:$2,400,000= 30.0% × $2,000,000 = $600,000$8,000,0002014: $(300,000) – 600,000 = $(900,000)2015: $(100,000) – (300,000) = $200,00017
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Balance Sheet, Generally Accepted Accounting Principles, Billings

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