Costs incurred during the year $ $2,400,000$ $ $5,700,000$ $ $2,700,000$

Estimated costs to complete as of year$-$end $7,200,0002,700,000$

Billings during the year $1,200,0006,000,0004,800,000$

Cash collections during the year $1,080,0004,520,0006,400,000$

Also during $2021,$ Citation began a development consisting of $12$ identical homes. Citation estimated that each home will sell for $$660,000,$ but individual sales prices are negotiated with buyers. Deposits were received for eight of the homes, three of which were completed during $2021$ and paid for in full for $$660,000$ each by the buyers. The completed homes cost $$495,000$ each to construct. The construction costs incurred during $2021$ for the nine uncompleted homes totaled $$2,970,000.$

Required:

$1.$ Which method is most equivalent to recognizing revenue at the point of delivery?

$2.$ Answer the following questions assuming that Citation concludes it does not qualify for revenue recognition over time for its office building contracts:

$2-$a$.$ How much revenue related to this contract will Citation report in its $2021$ and $2022$ income statements?

$2-$b$.$ What is the amount of gross profit or loss to be recognized for the Altamont contract during $2021$ and $2022?$

$2-$c$.$ What will Citation report in its December $31,2021,$ balance sheet related to this contract? $($Ignore cash.$)$

$3.$ Answer the following questions assuming that Citation recognizes revenue over time according to percentage of completion for its office building contracts.

$3-$a$.$ How much revenue related to this contract will Citation report in its $2021$ and $2022$ income statements?

$3-$b$.$ What is the amount of gross profit or loss to be recognized for the Altamont contract during $2021$ and $2022?$

$3-$c$.$ What will Citation report in its December $31,2021,$ balance sheet related to this contract? $($Ignore cash.$)$

$4.$ Assume the same information for $2021$ and $2022,$ but that as of year$-$end $2022$ the estimated cost to complete the office building is $$5,400,000.$ Citation recognizes revenue over time according to percentage of completion for its office building contracts.

$4-$a$.$ How much revenue related to this contract will Citation report in the $2022$ income statement?

$4-$b$.$ What is the amount of gross profit or loss to be recognized for the Altamont contract during $2022?$

$4-$c$.$ What will Citation report in its $2022$ balance sheet related to this contract? $($Ignore cash.$)$

$5.$ Which method of accounting should Citation Builders, Inc adopt for its single$-$family houses?

$6.$ 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$)?$

Answer rating: 100% (QA)

I will break down the responses for clarity 1 The method most equivalent to recognizing revenue at the point of delivery is the CompletedContract Meth... View the full answer