Colorado Construction Co., a private company that reports under ASPE, was contracted by a provincial government...

 

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Colorado Construction Co., a private company that reports under ASPE, was contracted by a provincial government to build a bridge over a river. The government owns the land on both sides of the river and it agreed to pay Colorado a fixed fee of $29,750,000 for the bridge. Colorado initially estimated the cost to build the bridge to be $21,500,000. Colorado's year end is December 31. Work began under the contract on July 1, 2019 and was completed on September 30, 2021. Construction activities are summarized below by year: Amount during the year collected during the year Year Construction costs Estimated costs to Progress billings incurred during the year complete (excludes already incurred costs 2019 $8,250,000 $13,000,000 $10,000,000 $12,000,000 2020 12,000,000 5,000,000 10,000,000 6,000,000 2021 5,250,000 9,750,000 11,750,000 Required: a. Provide the journal entries that Colorado would have to record for each year of the bridge contract. Use costs to determine the percentage of completion each year. Show your calculations b. Provide the balances that would be shown on the balance sheet and the income statement for this contract for each year. c. Now assume that at the end of 2020 Colorado estimated that the cost to complete the bridge project was $10 million instead of $5 million. What journal entries would be required for 2020 and 2021? Colorado Construction Co., a private company that reports under ASPE, was contracted by a provincial government to build a bridge over a river. The government owns the land on both sides of the river and it agreed to pay Colorado a fixed fee of $29,750,000 for the bridge. Colorado initially estimated the cost to build the bridge to be $21,500,000. Colorado's year end is December 31. Work began under the contract on July 1, 2019 and was completed on September 30, 2021. Construction activities are summarized below by year: Amount during the year collected during the year Year Construction costs Estimated costs to Progress billings incurred during the year complete (excludes already incurred costs 2019 $8,250,000 $13,000,000 $10,000,000 $12,000,000 2020 12,000,000 5,000,000 10,000,000 6,000,000 2021 5,250,000 9,750,000 11,750,000 Required: a. Provide the journal entries that Colorado would have to record for each year of the bridge contract. Use costs to determine the percentage of completion each year. Show your calculations b. Provide the balances that would be shown on the balance sheet and the income statement for this contract for each year. c. Now assume that at the end of 2020 Colorado estimated that the cost to complete the bridge project was $10 million instead of $5 million. What journal entries would be required for 2020 and 2021?

Answer rating: 100% (QA)

Financial Statement The completioncontract method US GAAP Statement of Income extract 31 December 20... View the full answer