Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2013 and was completed in 2014. Data relating to the contract are summarized...

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Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2013 and was completed in 2014. Data relating to the contract are summarized below:

2013	2014
Costs incurred during the year	$	300,000	$	1,575,000
Estimated costs to complete as of 12/31	1,200,000	0
Billings during the year	380,000	1,620,000
Cash collections during the year	250,000	1,750,000

Required:

Compute the amount of gross profit or loss to be recognized in 2013 and 2014 using the percentage-of-completion method.

Compute the amount of gross profit or loss to be recognized in 2013 and 2014 using the completed contract method.

Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2013 using the percentage-of-completion method.

4.	Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2013 using the completed contract method.

Answered Same Day Dec 24, 2021

Solution

David answered on Dec 24 2021

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Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2013 and was completed in 2014. Data relating to the contract are summarized...

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