On June 15, 2016, Sanderson Construction entered into a
long-term construction contract to build a baseball...
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Accounting
On June 15, 2016, Sanderson Construction entered into along-term construction contract to build a baseball stadium inWashington, D.C., for $400 million. The expected completion date isApril 1, 2018, just in time for the 2018 baseball season. Costsincurred and estimated costs to complete at year-end for the lifeof the contract are as follows ($ in millions):
2016
2017
2018
Costs incurred during the year
$
90
$
60
$
80
Estimated costs to complete as of December 31
150
50
—
Required:
1.
Compute the revenue and gross profit will Sanderson report inits 2016, 2017, and 2018 income statements related to this contractassuming Sanderson recognizes revenue over time according topercentage of completion. (Enter your answers in million.Use percentages as calculated and rounded in the table below toarrive at your final answer. Losses and expenses should beindicated with a minus sign.)
2.
Compute the amount of revenue and gross profit or loss to berecognized in 2016, 2017, and 2018 using the completed contractmethod. (Enter your answers in millions.)
3.
Suppose the estimated costs to complete at the end of 2017 are$150 million instead of $50 million. Compute the amount of revenueand gross profit or loss to be recognized in 2017 using thepercentage of completion method. (Do not round intermediatecalculations. Enter your answer in millions. Round your answers to1 decimal place.)
Answer & Explanation
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Solution 1 Computation of of completion revenue recognition and Gross Profit Sanderson Construction In Millions Year Actual cost incurred A Total cost incurred till date B Total estimated Cost C of completion D BC Contract Price E Total Revenue to be recognized F
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