20 queensbridge corp started a contract in june 2011 to build a bridge at a fixed pr 4306340

20 queensbridge corp started a contract in june 2011 to build a bridge at a fixed pr 4306340

20) Queensbridge Corp. started a contract in June 2011 to build a bridge at a fixed price of $45 million. The bridge was to be completed by October 2013 at a total estimated cost of $35 million. Total cumulative costs incurred by the end of December 2011 and 2012 were $7 million and $24 million, respectively. Because of cost overruns in 2012, it is now expected that the project will cost $5,000,000 more than originally estimated. Final costs at the end of the project totaled $36 million. Queensbridge Corp. follows the guidance in IFRS.

Requirement:

Determine the amount of gross profit to be recognized for the years ended December 31, 2011 and December 31, 2012.

21) WestCoast Co. started a contract in June 2011 to build a bridge at a fixed price of $14 million. The bridge was to be completed by October 2013. Total cumulative costs incurred by the end of December 2011 and 2012 were $2 million and $6 million, respectively. WestCoast Co. is unable to estimate the total costs of the project prior to completion. Final costs at the end of the project totaled $11 million.

Requirement:

Determine the amount of revenue, cost of sales, and gross profit WestCoast Co. would report in 2011, 2012, and 2013.

2011

2012

2013

Revenue

Cost of sales

Gross profit

22) Jones Contractors Inc. agreed to construct a building for $500,000. Construction commenced in 2011 and was completed in 2013.

2011

2012

2013

Costs incurred to date

159,300

217,405

103,295

Estimated costs to complete

290,700

81,295

0

Billings during the year

90,000

200,000

210,000

Collections during the year

82,500

199,000

207,000

Requirements:

For each of the three years, determine the following amounts relating to the above contract: revenue, expenses, gross profit, accounts receivable balance, and construction-in-process inventory balance.

2011

2012

2013

Revenue

Expenses

Gross profit (loss)

Accounts receivable at end of year

Construction in process inventory at end of year

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