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Revenue Recognition - Percentage of Completion - Project Instructions, Spring 2018 One of your clients is...

Revenue Recognition - Percentage of Completion - Project Instructions, Spring 2018

One of your clients is a large regional construction company. The company has many long-term projects in the works. The spreadsheet you are given contains some information about these jobs. Some of the jobs began last year and continue into the current year, so they exist on both tabs. The projects are in various phases of construction; some of which were completed during the current year.

You've been asked by your firm to analyze the data and prepare the following:

1) Complete the revenue recognition process by adding the necessary calculations into the blank columns F-J and L-M on the Current Year and Prior Year tabs and populate the data for all rows. It is expected that you look back at the text for definitions and to remind yourself of the percentage of completion method prior to asking questions.

Current year:

Job	Description	Final Est Contract Amount	Costs To Date	Total Est Cost @ Completion	Est to Complete	Est GP @ Completion	Cur % Comp	GP TO DATE	Earned Rev To Date	Billings To Date	Costs and profit in Excess of Billings	Billings in Excess of Costs and Profits	Phase	Revenue to Book
1959	MISC	7,465,878	7,247,171	7,247,523						7,465,878
1960	MISC	7,959,254	7,666,799	7,706,890						7,959,254
1968	MISC	46,201,877	44,283,436	45,810,921						44,435,743
1029	MISC	6,770,156	7,187,389	7,169,543						6,693,717
1972	MISC	13,157,854	9,938,521	12,926,801						10,169,759
1974	MISC	16,811,634	16,636,718	16,614,718						16,811,634
1978	MISC	3,240,516	3,180,526	3,180,526						3,290,995
1980	MISC	7,098,168	6,696,897	6,825,642						6,989,363
1981	MISC	22,464,145	22,067,900	22,067,900						22,462,520
1982	MISC	26,910,817	26,266,450	26,384,521						26,910,817
1987	MISC	21,527,597	20,758,005	20,758,244						21,527,597
1037	MISC	67,479	65,707	62,708						67,480
1038	MISC	966,844	949,107	938,107						966,845
1040	MISC	166,942	143,084	143,084						166,942
1041	MISC	700,689	598,903	598,804						700,689
1042	MISC	346,721	251,917	292,629						346,721
1043	MISC	1,079,159	1,079,159	1,079,159						1,079,190
1044	MISC	510,939	393,910	411,390						503,188
1991	MISC	21,145,050	21,511,616	21,511,616						21,045,050
1992	MISC	3,564,527	3,519,267	3,519,270						3,572,179
1994	MISC	7,789,575	7,516,192	7,552,450						7,789,575
1995	MISC	13,320,841	12,531,906	12,784,219						13,006,125
1996	MISC	13,535,310	12,331,088	13,178,122						13,029,481
1997	MISC	2,729,944	2,657,501	2,661,842						2,729,944
1998	MISC	7,341,782	5,274,107	7,161,359						5,440,960
1999	MISC	13,327,661	12,510,677	13,078,905						12,745,737
2000	MISC	3,479,901	3,391,393	3,392,850						3,479,901
2001	MISC	8,880,861	4,967,713	8,671,818						4,897,156
2002	MISC	5,407,348	5,097,975	5,232,080						5,278,519
2003	MISC	6,057,682	4,689,023	5,835,790						5,088,472
2004	MISC	3,388,921	3,327,035	3,371,364						3,388,921
2005.01	MISC	1,541,229	651,078	1,488,653						677,958
2005.02	MISC	1,382,138	494,118	1,382,138						494,118
2005.03	MISC	109,951	109,951	109,951						109,727
2006	MISC	6,243,535	4,063,446	6,138,535						4,160,662
2007	MISC	12,234,190	9,906,338	11,918,995						10,139,456
1045	MISC	1,273,869	473,014	1,178,757						558,982
1047	MISC	2,000,000	1,532,818	1,934,051						1,498,479
1048	MISC	289,132	280,188	277,088						289,132
1050	MISC	337,399	330,095	337,399						287,285
1051	MISC	103,714	91,533	93,701						95,000
1052	MISC	1,627,500	898,738	1,532,500						867,785
1053	MISC	587,936	119,971	534,936						59,133
1054	MISC	272,187	93,423	232,095						139,406
1055	MISC	1,368	1,189	1,189						-
1056	MISC	6,500	3,241	5,800						6,500
1057	MISC	160,254	3,979	151,254						53,418
2008	MISC	12,027,982	11,540,290	11,792,749						11,624,921
2010	MISC	3,564,023	3,442,746	3,482,704						3,510,318
2011	MISC	3,571,024	3,172,365	3,471,558						3,263,051
2012	MISC	8,863,236	3,382,784	8,483,236						3,484,037
2013	MISC	17,562,203	3,043,921	17,237,203						3,175,529
2014	MISC	3,469,196	1,713,032	3,379,313						2,240,054
2015	MISC	6,270,919	1,759,495	6,111,394						2,468,135
2017	MISC	906,972	870,069	870,070						907,612
2018	MISC	16,981,831	20,841	16,646,831						123,250
2019	MISC	12,514,813	734,163	12,188,248						825,637
2020	MISC	12,215,549	35,797	11,860,853						-
2021	MISC	5,475,364	82,553	5,575,364						226,051
2022	MISC	14,031,862	90,859	13,669,617						-
2023	MISC	-	831	-						-
2024	MISC	-	-	-						-
2025	MISC	5,399,500	-	5,243,500						-
2026	MISC	1,030,000	8,317	1,000,000						-
2027	MISC	5,700,000	-	5,586,000						-
1941	MISC	11,700,949	11,306,077	11,306,077						11,700,949
1951	MISC	430,558	429,853	429,853						430,558
1958	MISC	5,113,424	5,012,706	5,012,706						5,113,424
1966	MISC	2,746,125	2,749,328	2,749,328						2,746,125
1027	MISC	297,482	290,349	290,349						297,482
1028	MISC	1,462,324	1,478,580	1,478,580						1,462,324
1030	MISC	819,108	709,272	709,272						819,108
1971	MISC	5,439,533	5,205,826	5,205,826						5,439,533
1973	MISC	6,997,612	7,190,985	7,190,985						6,997,612
1975	MISC	3,541,081	3,412,625	3,412,625						3,541,081
1977	MISC	2,111,870	2,060,093	2,060,093						2,111,870
1979	MISC	3,883,384	4,095,004	4,095,004						3,883,384
1983	MISC	8,416,157	8,228,116	8,228,116						8,416,157
1984	MISC	10,454,724	10,201,631	10,201,631						10,454,724
1986	MISC	7,120,629	6,862,156	6,862,156						7,120,629
1988	MISC	244,433	190,944	190,944						244,433
1989	MISC	6,573,752	6,410,702	6,410,702						6,573,752
1031	MISC	356,254	331,883	331,883						356,254
1032	MISC	1,262,853	1,261,237	1,261,237						1,262,853
1033	MISC	2,184,271	1,668,446	1,668,446						2,184,271
1034	MISC	276,190	276,190	276,190						276,190
1035	MISC	221,826	206,835	206,835						221,826
1036	MISC	112,637	112,629	112,629						112,637
1039	MISC	73,237	56,173	56,173						73,237
1990	MISC	4,753,810	4,682,621	4,682,621						4,753,810
1993	MISC	2,419,387	2,381,836	2,381,836						2,419,387
1046	MISC	167,393	156,353	156,353						167,393
1049	MISC	204,076	177,714	177,714						204,076
		540,556,527	410,834,439	529,232,641	-	-	-	-	-	420,711,067	-	-

Prior Yr:

Job	Description	Final Est Contract Amount	Costs To Date	Total Est Cost @ Completion	Est to Complete	Est GP @ Completion	Cur % Comp	GP TO DATE	Earned Rev To Date	Billings To Date	Costs and profit in Excess of Billings	Billings in Excess of Costs and Profits
1977	MISC	2,090,204	2,058,488	2,060,000						2,090,204
1966	MISC	2,740,196	2,747,956	2,750,000						2,740,196
1951	MISC	429,853	429,853	429,853						430,558
1988	MISC	238,471	190,944	190,944						236,471
1027	MISC	297,482	290,349	290,349						277,482
1028	MISC	1,459,971	1,468,711	1,468,711						1,449,843
1030	MISC	819,108	707,310	707,310						805,483
1979	MISC	3,883,384	4,094,330	4,095,000						3,883,384
1036	MISC	112,637	112,618	112,637						112,637
1973	MISC	6,997,612	7,189,463	7,190,800						6,997,612
1974	MISC	16,396,834	16,098,923	16,107,664						15,945,665
1958	MISC	5,113,424	5,008,868	5,012,893						5,111,033
1984	MISC	10,458,619	10,191,522	10,204,882						10,453,214
1975	MISC	3,541,081	3,410,943	3,415,946						3,544,656
1941	MISC	11,700,949	11,277,526	11,305,949						11,700,949
1971	MISC	5,439,533	5,205,826	5,223,433						5,439,533
1960	MISC	7,959,254	7,633,497	7,706,890						7,959,254
1983	MISC	8,363,611	8,084,939	8,164,134						8,286,417
1978	MISC	3,240,516	3,146,456	3,180,516						3,185,418
1993	MISC	2,419,988	2,357,037	2,384,988						2,419,387
1035	MISC	220,950	205,377	208,000						217,330
1034	MISC	278,849	274,429	278,849						253,479
1980	MISC	7,098,168	6,710,276	6,825,642						6,945,454
1990	MISC	4,711,151	4,598,024	4,678,950						4,626,775
1989	MISC	6,661,286	6,383,190	6,497,850						6,556,992
1986	MISC	7,162,422	6,712,121	6,920,598						6,884,933
1037	MISC	68,879	56,897	61,400						67,480
1031	MISC	378,974	330,684	360,200						356,254
1981	MISC	22,282,269	20,016,392	22,051,402						20,470,769
1992	MISC	3,461,496	2,945,587	3,404,937						2,955,664
1991	MISC	20,138,168	16,559,725	19,452,425						17,234,825
1033	MISC	2,104,258	1,417,904	1,710,084						1,754,574
1029	MISC	6,674,301	5,588,592	6,912,342						5,447,628
1994	MISC	6,194,488	4,644,358	6,008,863						4,857,414
1032	MISC	1,327,931	1,025,867	1,327,931						987,505
1959	MISC	7,510,509	5,122,011	7,291,759						5,241,333
1987	MISC	21,977,597	14,703,934	21,524,620						15,315,793
1997	MISC	2,601,318	1,489,455	2,543,216						1,709,841
1039	MISC	72,622	36,578	62,622						47,226
1972	MISC	9,300,000	4,670,647	9,097,073						5,175,762
1982	MISC	28,064,434	13,169,455	27,648,138						14,477,824
1968	MISC	44,263,879	16,221,792	43,722,923						16,494,611
1996	MISC	8,000,000	2,586,688	7,825,000						2,743,271
1041	MISC	701,835	54,041	633,948						112,435
1038	MISC	835,000	63,697	755,000						75,493
1040	MISC	166,121	11,069	143,721						35,000
2000	MISC	3,460,051	248,325	3,375,675						206,325
1999	MISC	11,950,980	547,127	11,651,589						586,828
1995	MISC	13,371,080	368,910	12,831,080						383,667
2002	MISC	3,500,000	66,826	3,411,000						62,565
2003	MISC	4,624,038	54,191	4,461,051						0
2001	MISC	8,437,049	30,923	8,235,633						289,215
1043	MISC	628,920	1,801	628,920						1,801
2006	MISC	6,000,000	1,739	5,820,000						0
2004	MISC	3,440,871	828	3,330,871						0
1998	MISC	5,500,000	875	5,375,000						0
2007	MISC	12,100,481	0	11,789,465						0
2005	MISC	0	0	0						0
1042	MISC	302,473	0	268,381						0
1044	MISC	0	0	0						0
1925	MISC	12,598,919	11,943,651	11,943,651						12,598,919
1932.01	MISC	38,775,649	37,277,096	37,277,096						38,775,649
1932.02	MISC	15,209,443	14,612,438	14,612,438						15,209,443
1933	MISC	17,332,336	16,836,298	16,836,298						17,332,336
1940	MISC	2,908,333	2,577,844	2,577,844						2,908,333
1023	MISC	110,178	110,174	110,174						110,178
1944	MISC	6,010,630	5,769,964	5,769,964						6,010,630
1945	MISC	2,982,172	2,872,203	2,872,203						2,982,172
1949	MISC	3,552,127	3,314,044	3,314,044						3,552,127
1954	MISC	3,011,044	2,906,830	2,906,830						3,011,044
1961	MISC	4,403,166	4,250,089	4,250,089						4,403,166
1965	MISC	3,649,431	3,600,724	3,600,724						3,649,431
1967	MISC	3,256,442	3,158,722	3,158,722						3,256,442
1970	MISC	771,601	688,644	688,644						771,601
1026	MISC	185,392	156,420	156,420						185,392
1976	MISC	7,990,442	7,796,645	7,796,645						7,990,442
1985	MISC	4,962,349	4,826,861	4,826,861						4,962,349
		506,985,229	351,324,541	493,827,704	0	0		0	0	363,355,116	0	0

Expert Solution

Under percentage of completion method total estimated revenue and total estimated costs of a project are considered.

Where the cost incurred till the last date of the accounting period is compared with the total estimated cost and a percentage is arrived at.

The arrived percentage of the estimated revenue is to be accrued as revenue for the said accounting period.

In the next period, where the project has further executed, the new percentage of completion is arrived with the total cost incurred till date for the project and the total cost estimated of the project.

The percentage is applied to get the proportionate revenue to be recognised.

The revenue so recognized after reducing the revenue recognized in previous period is considered to be the revenue to be accrued for the current period.

Based on the above principle, the excel sheet with the formulae displayed on the top are the workings for the projects revenue to be recognized.

ekkarill92 answered 1 year ago

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