Assume Nortel Netaorks contracted to provide a customer with Intemet infrastructure for $2,000,000. The
project began in 2018 and was completed in 2017. Data relating o the contract are summarzed Balow
2016 2017
Costs incured during the year $300,000 $1,576,000
Estimated casts to complete 2s of 12/31 1,200,000 0
Billings during the year ‘300,000 4,620,000
‘Cash collections during the year 250,000 1.760.000
Required:
11. Compute the amount of ravenue and gross profit or lacs to be recognized in 2916 and 2017 assuming
Nariel wecognizes revenue over time ‘acearding to percentage of completion (Use percentages as
‘calculated and rounded in the table below to arrive at your final answer. Losses and expenses
‘should be indicated with a minus sign.)
Estimated total gross profit (oss) (6 5.600.000) 4,100.00)% complete to dato
20.00%
10.00%2. Compute tha amount of reverua and gross profit or loss to be recognized in 2018 and 2017 assuming
this project dows not qualify For revenue recognition overtime.
2016
2017
43, Prepare a patial balance sheet to show how the information related to this contrast would be presented
atthe end of 2016 assuming Nortalrecosnizes revenue over timo azcording to percontage of
completion
Current assets:
‘Accounts receivable 150000
Curent attics:
Bilings in excess of costs 20000