Questions
Real Estate Appraisal QUESTION 13 Reproduction cost Is the cost associated with the construction of a...
Real Estate Appraisal
QUESTION 13
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Reproduction cost
Is the cost associated with the construction of a substitute of like utility
Is the cost to construct an exact duplicate of the subject improvements
Is always the same as replacement cost
Can only be estimated by a contractor or an architect
1 points
QUESTION 14
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Direct costs are
Expenditures for items that are necessary but not usually included in the construction contract
Expenditures for the labor and material used in the construction of the improvements
An incentive that is market derived and provides compensation for the developer
The costs associated with fees and interest
1 points
QUESTION 15
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Physical deterioration refers to
Losses in value from wear and tear
Losses in value from all causes
Losses in value from changes in market tastes
Losses in value from proximity to an adverse condition in the neighborhood
1 points
QUESTION 16
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If a property has diminished valued because of factors outside the property, the loss is classified as:
Functional obsolescence
External obsolescence
Physical obsolescence
Physical depreciation
In: Finance
Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows:
| 2021 | 2022 | 2023 | |||||||
| Cost incurred during the year | $ | 2,610,000 | $ | 3,162,000 | $ | 2,230,800 | |||
| Estimated costs to complete as of year-end | 6,390,000 | 2,028,000 | 0 | ||||||
| Billings during the year | 2,100,000 | 3,672,000 | 4,228,000 | ||||||
| Cash collections during the year | 1,850,000 | 3,000,000 | 5,150,000 | ||||||
Westgate recognizes revenue over time according to percentage of completion.
Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)
In: Accounting
In 2021, the Westgate Construction Company entered into a contract to construct a bridge for $12,000,000....
In 2021, the Westgate Construction Company entered into a contract to construct a bridge for $12,000,000.
The bridge was completed in 2023. Information related to the contract is as follows:
2021 2022 2023
Cost incurred during the year $1,840,000 $3,760,000
$4,500,000
Estimated costs to complete as of year-end $6,160,000 $5,600,000
$0
Billings during the year $3,000,000 $4,000,000 $5,000,000
Cash collections during thee year $2,600,000
$3,900,000 $5,100,000
a. Westgate recognizes revenue over time according to percentage of completion. What gross profit (loss) will Westgate record on the contract for 2022?
b. Westgate recognizes revenue using the completed contract method. What amount will Westgate show on the balance sheet at December 31, 2022?
In: Accounting
In 2021, the Westgate Construction Company entered into a contract to construct a bridge for $12,000,000....
In 2021, the Westgate Construction Company entered into a contract to construct a bridge for $12,000,000.
The bridge was completed in 2023. Information related to the contract is as follows:
2021 2022 2023
Cost incurred during the year $1,840,000 $3,760,000
$4,500,000
Estimated costs to complete as of year-end $6,160,000 $5,600,000
$0
Billings during the year $3,000,000 $4,000,000 $5,000,000
Cash collections during thee year $2,600,000
$3,900,000 $5,100,000
a. Westgate recognizes revenue over time according to percentage of completion. What gross profit (loss) will Westgate record on the contract for 2022?
b. Westgate recognizes revenue using the completed contract method. What amount will Westgate show on the balance sheet at December 31, 2022?
In: Accounting
Required information In 2018, the Westgate Construction Company entered into a contract to construct a...
Required information
In 2018, the Westgate Construction Company entered into a contract
to construct a road for Santa Clara County for $10,000,000. The
road was completed in 2020. Information related to the contract is
as follows:
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,156,000 | $ | 3,388,000 | $ | 2,371,600 | |||
| Estimated costs to complete as of year-end | 5,544,000 | 2,156,000 | 0 | ||||||
| Billings during the year | 2,130,000 | 3,414,000 | 4,456,000 | ||||||
| Cash collections during the year | 1,865,000 | 3,300,000 | 4,835,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
3. Complete the information required below to
prepare a partial balance sheet for 2018 and 2019 showing any items
related to the contract. (Do not round intermediate
calculations.)
In: Accounting
On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its...
On January 1, 2018, the Highlands Company began construction on
a new manufacturing facility for its own use. The building was
completed in 2019. The company borrowed $2,100,000 at 8% on January
1 to help finance the construction. In addition to the construction
loan, Highlands had the following debt outstanding throughout
2018:
| $7,000,000, 13% bonds | |
| $3,000,000, 8% long-term note | |
Construction expenditures incurred during 2018 were as
follows:
| January 1 | $ | 860,000 | |
| March 31 | 1,460,000 | ||
| June 30 | 1,112,000 | ||
| September 30 | 860,000 | ||
| December 31 | 660,000 | ||
Required:
Calculate the amount of interest capitalized for 2018 using the
specific interest method. (Do not round the intermediate
calculations. Round your percentage answers to 1 decimal place
(i.e. 0.123 should be entered as 12.3%).)
|
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In: Accounting
In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa...
In 2018, the Westgate Construction Company entered into a
contract to construct a road for Santa Clara County for
$10,000,000. The road was completed in 2020. Information related to
the contract is as follows:
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,059,000 | $ | 2,627,000 | $ | 2,655,400 | |||
| Estimated costs to complete as of year-end | 5,041,000 | 2,414,000 | 0 | ||||||
| Billings during the year | 2,190,000 | 2,496,000 | 5,314,000 | ||||||
| Cash collections during the year | 1,895,000 | 2,400,000 | 5,705,000 | ||||||
Westgate recognizes revenue over time according to percentage of
completion.
Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)
2-a. In the journal below, complete the
necessary journal entries for the year 2018 (credit "Various
accounts" for construction costs incurred).
2-b. In the journal below, complete the necessary
journal entries for the year 2019 (credit "Various accounts" for
construction costs incurred).
2-c. In the journal below, complete the necessary
journal entries for the year 2020 (credit "Various accounts" for
construction costs incurred).
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,059,000 | $ | 3,895,000 | $ | 3,295,000 | |||
| Estimated costs to complete as of year-end | 5,041,000 | 3,195,000 | 0 | ||||||
5. Calculate the amount of revenue and gross
profit (loss) to be recognized in each of the three years assuming
the following costs incurred and costs to complete information.
(Do not round intermediate calculations and round your
final answers to the nearest whole dollar amount. Loss amounts
should be indicated with a minus sign.)
| 2018 | 2019 | 2020 | |||||||
| Cost incurred during the year | $ | 2,059,000 | $ | 3,895,000 | $ | 4,185,000 | |||
| Estimated costs to complete as of year-end | 5,041,000 | 4,290,000 | 0 | ||||||
In: Accounting
The daily demand for hotel rooms on Miami in Florida is given by the equation Qd=...
The daily demand for hotel rooms on Miami in Florida is given by the equation Qd= 150,000 – 275P. The daily supply of hotel rooms on Miami is given by the equation Qs= 25,000 +312.5P. Diagram these demand and supply curves in the price. What is the equilibrium price and quantity of hotel rooms on Miami?
In: Economics
McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun...
McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun in 2020 and completed in 2021. Cost and other data are presented below:
2020 2021
Costs incurred during the year $1,500,000 $1,300,000
Estimated costs to complete 1,200,000 0
Billings during the year 1,200,000 1,300,000
Cash collections during the year 1,000,000 1,500,000
Part 1: Assume that McCombs recognizes revenue on this contract over time according to percentage of completion. Required: Compute the amount of gross profit recognized during 2020 and 2021.
Part 2: Assume that McCombs recognizes revenue on this contract over time according to percentage of completion. Required: Prepare all journal entries to record costs, billings, collections, and profit (loss) recognition. Round your answers to the nearest whole dollar.
Part 3: Assume that McCombs recognizes revenue upon project completion. Required: Compute the amount of gross profit recognized by McCombs during 2020 and 2021.
In: Accounting
Citation Builders, Inc., builds office buildings and single-family homes. The office buildings are constructed under contract with reputable buyers.
Citation Builders, Inc., builds office buildings and single-family homes. The office buildings are constructed under contract with reputable buyers. The homes are constructed in developments ranging from 10–20 homes and are typically sold during construction or soon after. To secure the home upon completion, buyers must pay a deposit of 10% of the price of the home with the remaining balance due upon completion of the house and transfer of title. Failure to pay the full amount results in forfeiture of the down payment. Occasionally, homes remain unsold for as long as three months after construction. In these situations, sales price reductions are used to promote the sale.
During 2021, Citation began construction of an office building for Altamont Corporation. The total contract price is $20 million. Costs incurred, estimated costs to complete at year-end, billings, and cash collections for the life of the contract are as follows:
Also during 2021, Citation began a development consisting of 12 identical homes. Citation estimated that each home will sell for $600,000, but individual sales prices are negotiated with buyers. Deposits were received for eight of the homes, three of which were completed during 2021 and paid for in full for $600,000 each by the buyers. The completed homes cost $450,000 each to construct. The construction costs incurred during 2021 for the nine uncompleted homes totaled $2,700,000.
Required:
1. Briefly explain the difference between recognizing revenue over time and upon project completion when accounting for long-term construction contracts.
2. Answer the following questions assuming that Citation concludes it does not qualify for revenue recognition over time for its office building contracts:
a. How much revenue related to this contract will Citation report in its 2021 and 2022 income statements?
b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2021 and 2022?
c. What will Citation report in its December 31, 2021, balance sheet related to this contract? (Ignore cash.)
3. Answer requirements 2a through 2c assuming that Citation recognizes revenue over time according to percentage of completion for its office building contracts.
4. Assume the same information for 2021 and 2022, but that as of year-end 2022 the estimated cost to complete the office building is $9,000,000. Citation recognizes revenue over time according to percentage of completion for its office building contracts.
a. How much revenue related to this contract will Citation report in the 2022 income statement?
b. What is the amount of gross profit or loss to be recognized for the Altamont contract during 2022?
c. What will Citation report in its 2022 balance sheet
related to this contract? (Ignore cash.)
5. When should Citation recognize revenue for the sale of its single-family homes?
6. What will Citation report in its 2021 income statement and 2021 balance sheet related to the single-family home business (ignore cash in the balance sheet)?
In: Accounting