Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in

Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2011 and was completed in 2012. Data relating to the contract are summarized below:

Required:
1. Compute the amount of gross profit or loss to be recognized in 2011 and 2012 using the percentage-of-completion method.
2. Compute the amount of gross profit or loss to be recognized in 2011 and 2012 using the completed contract method.
3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2011 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 2011 using the completed contractmethod.

Transcribed Image Text:

2011 2012 Costs incurred during 3000001575000 the year Estimated costs to 12,00,000n complete as of 12/31 Billings during the year Cash collections during the year 2,50,00017,50,000