Computing Revenue and Gross Profit on LongTerm Construction Contract
Supplier Corp. enters into a government contract during the year to provide computer equipment for $ The contract consists of a single performance obligation to provide specified
equipment in three years. Total costs estimated by Supplier Corp. for the contract are $ The equipment is highly specialized and has no alternative uses. As negotiated in the contract, any
costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp. in the event of a contract cancellation. Actual costs incurred during the year were $ including
unexpected cost overruns of $ due to labor inefficiencies.
a point in time for this contract?
b Calculate recognized revenue, the gross profit, and adjusted contract margin to be recorded during the year.
