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Classical Ltd. Began work in 2020 on a contract for $ 1,250,000. Other data are:         ...

Classical Ltd. Began work in 2020 on a contract for $ 1,250,000. Other data are:

         2020                           2021

         Costs incurred to date......................................................................      $ 540,000                 $ 875,000

         Estimated costs to complete as of December 31.................         360,000 100,000

         Billings to date.....................................................................................         420,000 950,000

         Collections to date.............................................................................         300,000 700,000

Classical uses the percentage-of-completion method. Gross profit recognized in 2020 was $210,000 (Revenue $750,000; expense $540,000). The 2020 opening balance on LT Contract Asset/Liab is $330,000 DR.

Required:

(a) Calculate gross profit to be recognized in 2021.

(b) What amounts will be reported on the Statement of Financial Position in 2021?

(c) If the estimated costs to complete were $300,000 at the end of 2021, how would your response to part (a) change?

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Classical Ltd. Began work in 2020 on a contract for $ 1,250,000. Other data are:

ekkarill92 answered 1 year ago
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