14. Asahi Technology has a contract to build a network for a customer for a total...

 

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14. Asahi Technology has a contract to build a network for a customer for a total sales price of €10 million. The network will take an estimated three years to build, and total building costs are estimated to be €6 million. Asahi recognizes long-term contract revenue using the percentage-of-completion method and estimates percentage complete based on expenditure incurred as a percentage of total estimated expenditures. -At the end of Year 1, the company had spent €3 million. Total costs to complete are estimated to be another €3 million. -At the end of Year 2, the company had spent an additional €2 million for an accumulated total of €5 million. Total costs to complete are estimated to be another €1.25 million. -At the end of Year 3, the contract is complete. The company spent an accumulated total of €6.4 million. How much revenue will Asahi recognize in Year 2? 14. Asahi Technology has a contract to build a network for a customer for a total sales price of €10 million. The network will take an estimated three years to build, and total building costs are estimated to be €6 million. Asahi recognizes long-term contract revenue using the percentage-of-completion method and estimates percentage complete based on expenditure incurred as a percentage of total estimated expenditures. -At the end of Year 1, the company had spent €3 million. Total costs to complete are estimated to be another €3 million. -At the end of Year 2, the company had spent an additional €2 million for an accumulated total of €5 million. Total costs to complete are estimated to be another €1.25 million. -At the end of Year 3, the contract is complete. The company spent an accumulated total of €6.4 million. How much revenue will Asahi recognize in Year 2?

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Answer Percentage of contract completed in the year 2 Cost ... View the full answer