Bohr Co is a construction company and has entered into a contract with a fixed price of £600,000 during the year ended 30^thNovember 20X8.  Bohr Co measures percentage completion using the work certified as a proportion of contract value.

The following information relates to the contract:

Requirement

1. Prepare the relevant Statement of profit or loss and Statement of financial position extracts in respect of the above contract for the year ended 30^thNovember 20X8.       

2. Before the financial statements are finalised, technical problems on the contract mean that costs to complete are reassessed to £275,000. Prepare the amended Statement of profit or loss extract for the year ended 30^thNovember 20X8. A Statement of financial position is notrequired.                                                                                                    

3. Explain the different approaches in a) and b).

On May 1, 2020, Jackson Construction Company contracted to construct a factory building for a total contract price of $9,600,000. The building was completed by May 31,2022. The annual contract costs incurred, estimated costs to complete the contract, and accumulated billings to Fabrik for 2020, 2021, and 2022 are given below.                                                                       

                                                                                                            2020                                    2021                      2022

Contract costs incurred during the year                            $3,400,000            $2,400,000          $2,900,000

Estimated costs to complete the contract at Dec 31           4,600,000             3,100,000                    -0-

Billings                                                                                         1,200,000           4,100,000             4,300,000

"(a)   Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.)

(b) Using the completed-contract method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore incomes taxes.)"                               

During 2020, Grouper Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available.

Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.

Prepare all necessary journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.)

Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.

Gale, McLean, and Lux are partners of Burgers and Brew Company with capital balances as follows: Gale, $91,000; McLean, $83,000; and Lux, $154,000. The partners share profit and losses in a 3:2:5 ratio. McLean decides to withdraw from the partnership. Prepare General Journal entries to record the May 1, 2017, withdrawal of McLean from the partnership under each of the following unrelated assumptions:

a. McLean sells his interest to Freedman for $175,000 after Gale and Lux approve the entry of Freedman as a partner (where McLean receives the cash personally from Freedman).

Record the admission of Freedman.

b. McLean gives his interest to a son-in-law, Park. Gale and Lux accept Park as a partner.

Record the admission of Park.

c. McLean is paid $83,000 in partnership cash for his equity.

Record withdrawal of McLean, where he is paid $83,000 in partnership cash for his equity.

d. McLean is paid $139,000 in partnership cash for his equity.

Record the withdrawal of McLean assuming, he is paid $139,000 in partnership cash for his equity.

e. McLean is paid $34,250 in partnership cash plus machinery that is recorded on the partnership books at $122,000 less accumulated depreciation of $90,000. (Round final answers to 2 decimal places.)

Record the withdrawal of McLean assuming, he is paid $34,250 in partnership cash plus machinery that is recorded on the partnership books at $122,000 less accumulated depreciation of $90,000.

1. A manufacturing company manufactures a cardboard box with a square base and a height of 15 inches. Suppose the equation x² +60x- 7,200 = 0 can be used to find the length and width of the base of the box, each measuring x inches.

Write the equation in factored form.

Use the zero product property to solve the equation. Show all the steps needed to find both answers.

Explain how the solution relates to this situation

2. City engineers decide to build a rectangular dog park that has an area of 3,600 square yards, where the length of the park is 10 more yards than twice its width. The equation x² +5x-1,800 = 0 can be used to find the width of the dog park.

Write the equation in factored form

Use the zero product property to solve the equation. Show all the steps needed to find both answers.

Explain how the solution relates to this situation.

3. A graphic designer uses a photo editing program to increase both the height and width of a square image by 3 inches. Suppose the equation x² +6x-55 = 0 can be used to find the height and width of the original image.

Write the equation in factored form.

Use the zero product property to solve the equation. Show all the steps needed to find both answers.

Explain how the solution relates to this situation.

Let x be a random variable that represents the weights in kilograms (kg) of healthy adult female deer (does) in December in a national park. Then x has a distribution that is approximately normal with mean μ = 64.0 kg and standard deviation σ = 7.7 kg. Suppose a doe that weighs less than 55 kg is considered undernourished.

(a) What is the probability that a single doe captured (weighed and released) at random in December is undernourished? (Round your answer to four decimal places.) Incorrect: Your answer is incorrect.

(b) If the park has about 2250 does, what number do you expect to be undernourished in December? (Round your answer to the nearest whole number.) Incorrect: Your answer is incorrect. does

(c) To estimate the health of the December doe population, park rangers use the rule that the average weight of n = 55 does should be more than 61 kg. If the average weight is less than 61 kg, it is thought that the entire population of does might be undernourished. What is the probability that the average weight x for a random sample of 55 does is less than 61 kg (assuming a healthy population)? (Round your answer to four decimal places.) Incorrect: Your answer is incorrect.

(d) Compute the probability that x < 65.1 kg for 55 does (assume a healthy population). (Round your answer to four decimal places.)

Mini Case Study – Sales and Marketing at the Edgewater Hotel Seattle Set on the Pier 67 in the Seattle Central Waterfront, the Edgewater is one of the most iconic properties in all of the Pacific Northwest. The hotel first opened as a temporary building, meant to attract visitors for the 1962 World's Fair. Today has built a rich history to match its ideal location and luxurious furnishings, but there’s a growing debate among the Sales & Marketing team about the direction of its market positioning. Bob Peckenpaugh, General Manger of the property, needs your help in deciding on their strategy A History of Rock ‘n Roll The Edgewater became famous both inside and outside of Seattle for hosting some of the biggest names in music. During the height of the “British Invasion” of America, the Beatles helped put the Edgewater on the map. A few months after the Beatles famous set on the Ed Sullivan Show, the Beatles spent the third stop on their first tour of America at the (then named) Edgewater Inn. Seattle hotel owners were afraid of riots and damage from a visit, so Don Wright, then Manager of the property took them in as he knew they would get a lot of attention for the Edgewater Inn. He was right.

1. Who do you think are the customers of Edgewater today? Does that align with the product?

2. What approach option do you think that Bob should take? Why is that the right approach or why are the other options the wrong approach?

ABC Construction (ABC or the “Company”), an SEC registrant, is a construction company that manufactures commercial and residential buildings. On March 1, 2018, the Company entered into an agreement with a customer, Village Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Village Apartments once the construction of the entire building is complete. In addition, Village Apartments has various design requirements that would require ABC to incur significant costs to rework the building prior to selling it to a customer other than Village Apartments.  

To construct the apartment building, ABC acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Village Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in a Village Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:

• As of June 30, 2018, in total, ABC has purchased $75,000 of component parts. As of June 30, 2018, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, ABC has incurred $12,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended June 30, 2018.

• During the three months ended September 30, 2018, ABC purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 2018. During the three months ended September 30, 2018, ABC incurred an additional $50,000 of direct costs to integrate the component parts into the Village Apartments construction project.

• As of September 30, 2018, ABC determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.

• As of December 3, 2018, the construction project was completed. During the three months ended December 31, 2018, ABC purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 2018. ABC has incurred $187,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended December 31, 2018.

If Village Apartments cancels the contract, ABC will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is considered to be a reasonable margin. ABC will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by ABC.

Required:

1. Does the performance obligation meet any of the criteria or recognition of revenue over time?

2. How should the entity recognize revenue for the satisfaction of its performance obligation? What amount of revenue should be recognized for the following periods:  

2a. The three months ended June 30, 2018?

2b. The three months ended September 30, 2018?  

2c. The three months ended December 31, 2018?

ABC Construction (ABC or the “Company”), an SEC registrant, is a construction company that manufactures commercial and residential buildings. On March 1, 2018, the Company entered into an agreement with a customer, Village Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Village Apartments once the construction of the entire building is complete. In addition, Village Apartments has various design requirements that would require ABC to incur significant costs to rework the building prior to selling it to a customer other than Village Apartments.

To construct the apartment building, ABC acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Village Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in a Village Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:

• As of June 30, 2018, in total, ABC has purchased $75,000 of component parts. As of June 30, 2018, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, ABC has incurred $12,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended June 30, 2018.

• During the three months ended September 30, 2018, ABC purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 2018. During the three months ended September 30, 2018, ABC incurred an additional $50,000 of direct costs to integrate the component parts into the Village Apartments construction project.

• As of September 30, 2018, ABC determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.

• As of December 3, 2018, the construction project was completed. During the three months ended December 31, 2018, ABC purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 2018. ABC has incurred $187,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended December 31, 2018.

If Village Apartments cancels the contract, ABC will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is considered to be a reasonable margin. ABC will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by ABC.

Required:

1. Does the performance obligation meet any of the criteria or recognition of revenue over time?

2. How should the entity recognize revenue for the satisfaction of its performance obligation? What amount of revenue should be recognized for the following periods:

2a. The three months ended June 30, 2018?

2b. The three months ended September 30, 2018?

2c. The three months ended December 31, 2018?

Nailed It! Construction (Nailed It! or the “Company”), an SEC registrant, is a construction company that manufactures commercial and residential buildings. On March 1, 20X1, the Company entered into an agreement with a customer, Village Apartments, to construct a residential apartment building for a fixed price of $1.5 million. The Company estimates that it will incur costs of $1 million to complete construction of the apartment building. The apartment building will only transfer to Village Apartments once the construction of the entire building is complete. In addition, Village Apartments has various design requirements that would require Nailed It! to incur significant costs to rework the building prior to selling it to a customer other than Village Apartments.

To construct the apartment building, Nailed It! acquires standard materials that it regularly uses in construction contracts for both residential and commercial buildings. These materials are used to manufacture generic component parts for inclusion in Village Apartments’ residential buildings. These standard materials remain interchangeable with other items until they are deployed in a Village Apartments building. The Company has made the following purchases and incurred the following costs throughout the construction progress:

• As of June 30, 20X1, in total, Nailed It! has purchased $75,000 of component parts. As of June 30, 20X1, $25,000 of component parts remain in inventory and $50,000 have been integrated into the project. Further, Nailed It! has incurred $12,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended June 30, 20X1.

• During the three months ended September 30, 20X1, Nailed It! purchased an additional $500,000 of component parts ($575,000 in total). Of the $575,000 of component parts, $325,000 remain in inventory and $200,000 have been integrated into the project during the three months ended September 30, 20X1. During the three months ended September 30, 20X1, Nailed It! incurred an additional $50,000 of direct costs to integrate the component parts into the Village Apartments construction project.

• As of September 30, 20X1, Nailed It! determined that the project was over budget and revised its cost estimate from $1 million to $1.25 million.

• As of December 31 20X1, the construction project was completed. During the three months ended December 31, 20X1, Nailed It! purchased an additional $425,000 of generic component parts ($1 million in total). Of the $1 million component parts, $0 remain in inventory and $750,000 were integrated into the project during the three months ended December 31, 20X1. Nailed It! has incurred $187,500 of direct costs to integrate the component parts into the Village Apartments construction project during the three months ended December 31, 20X1.

If Village Apartments cancels the contract, Nailed It! will be entitled to reimbursement for costs incurred for work completed to date plus a margin of 20 percent, which is considered to be a reasonable margin. Nailed It! will not be reimbursed for any materials that have been purchased for use in the contract but have not yet been used and are still controlled by Nailed It!.

Required: (using the appropriate sections of ASC 606)

1. Does the performance obligation meet any of the criteria or recognition of revenue over time?

2. How should the entity recognize revenue for the satisfaction of its performance obligation? What amount of revenue should be recognized for the following periods:

2a. The three months ended June 30, 20X1?

2b. The three months ended September 30, 20X1?

2c. The three months ended December 31, 20X1?