80.2K

Verified Solution

Link Copied!

What is the value of the error?

Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,960,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2021 2022 $ 380,000 $2,300,000 1,520,000 0 540,000 1,820,000 510,000 1,850,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming Nortel recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming this project does not qualify for revenue recognition over time. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming Nortel recognizes revenue over time according to percentage of completion. Balance Sheet (Partial) At December 31, 2021 Current assets: Accounts receivable Costs and profit in excess of billings $ 30,000 90,000 ? Current liabilities

Answer & Explanation Solved by verified expert

See Answer