3. Free Form Builders Ic., a construction company, recognizes revenue from its long-term contracts using the...

 

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3. Free Form Builders Ic., a construction company, recognizes revenue from its long-term contracts using the percentage-of-completion method. On March 29, 2017, the company signed a contract to construct a building for $1 million. The company estimated that it would take four years to complete the contract and estimated the cost to the company at $625,000, as follows: Year 2017 2018 Cost $100,000 $150,000 $175,000 $200,000 $625.000 2019 2020 Total The actual costs in 2017 and 2018 ended up being exactly as estimated. At the end of 2017, Free Form expected costs for 2018-2020 to be exactly as estimated. However, on December 31, 2018, the company revised its estimates for the costs in 2019 and 2020. It estimated that it would cost $200,000 in 2019 and $300,000 in 2020 to complete the contract. 2019's actual costs were $100,000 more than estimated. At the end of 2019, the estimated costs to complete the contract were $400,000. 2020's actual costs ended up being $50,000 less than estimated. Required: Compute the revenue, expense, and profit/loss for each of the four years. Use FOUR DECIMAL PLACES (for calculation of percentage completed). Question 4 The following information relates to the held-for-trading investments ("HFTI") of Anders Corp. Market Value Dec. 31 2017 2018 Selling Acquisition Acquisition Cost Date Security Sold 2016 Date Price Alpha Beta Delta Apr. 13, 2016 $140,000 Aug. 24, 2016 $80,000 May 27, 2017 $100,000 $90,000 Jan. 8, 2017 Jan. 3, 2018 $180,000 June 30, 2018 $200,000 N/A $130,000 $140,000 $150,000 N/A $70,000 N/A N/A $90,000 N/A $80,000 N/A N/A Omega N/A N//A N/A The Anders Corp. closes its books on December 31 each year. ["N/A" means not applicable.] Required: a. Prepare journal entries relating to these held-for-trading investments for each year. (There are NO brokerage fees.) b. Show how the information regarding held-for-trading investments would be presented on the income statement and balance sheet for each year. 3. Free Form Builders Ic., a construction company, recognizes revenue from its long-term contracts using the percentage-of-completion method. On March 29, 2017, the company signed a contract to construct a building for $1 million. The company estimated that it would take four years to complete the contract and estimated the cost to the company at $625,000, as follows: Year 2017 2018 Cost $100,000 $150,000 $175,000 $200,000 $625.000 2019 2020 Total The actual costs in 2017 and 2018 ended up being exactly as estimated. At the end of 2017, Free Form expected costs for 2018-2020 to be exactly as estimated. However, on December 31, 2018, the company revised its estimates for the costs in 2019 and 2020. It estimated that it would cost $200,000 in 2019 and $300,000 in 2020 to complete the contract. 2019's actual costs were $100,000 more than estimated. At the end of 2019, the estimated costs to complete the contract were $400,000. 2020's actual costs ended up being $50,000 less than estimated. Required: Compute the revenue, expense, and profit/loss for each of the four years. Use FOUR DECIMAL PLACES (for calculation of percentage completed). Question 4 The following information relates to the held-for-trading investments ("HFTI") of Anders Corp. Market Value Dec. 31 2017 2018 Selling Acquisition Acquisition Cost Date Security Sold 2016 Date Price Alpha Beta Delta Apr. 13, 2016 $140,000 Aug. 24, 2016 $80,000 May 27, 2017 $100,000 $90,000 Jan. 8, 2017 Jan. 3, 2018 $180,000 June 30, 2018 $200,000 N/A $130,000 $140,000 $150,000 N/A $70,000 N/A N/A $90,000 N/A $80,000 N/A N/A Omega N/A N//A N/A The Anders Corp. closes its books on December 31 each year. ["N/A" means not applicable.] Required: a. Prepare journal entries relating to these held-for-trading investments for each year. (There are NO brokerage fees.) b. Show how the information regarding held-for-trading investments would be presented on the income statement and balance sheet for each year.

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