L W E Home = Menu Paste W Chapter 4 Re...ent Question Cut Copy + Guest Home Insert Page Layout References Mailings Review View Section Tools Table Tools Table Style Calibri (Body) 11 A+ A It S AaBbCcDd AaBb AaBbCc AaBbCc Al Format BIUA X X2 A ab A Normal Head... Head... Head... New Style Find and Replace Select Settings Chapter 4 Revenue Recognition Dutch Resources is investing in a new heavy oil upgrader in northern Alberta. Dutch has hired Steel Top Contractors to construct the facilities. The contract price is $4,300 million to be completed over four years. The following information pertains to this construction contract. ($ in millions) Year 1 Cumulative costs 370 Year 2 2,050 Year 3 2,820 Year 4 4,500 incurred to date Estimated additional 3,330 2,050 1,880 0 costs to completed Billings on construction 400 600 650 2,650 in progress Cash collected in the year 350 590 690 2,670 Costs incurred to date Estimated cost to complete Estimated total cost % complete Contract price Cumulative revenue Less: revenue previously recognized Current-year revenue Required: a. Compute the amount of revenue and expense to be recognized in the accounts of Steel Top Contractors in each of the four years. Show computations in tabular format in a spreadsheet. b. Prepare all the journal entries required in Year 1. c. Prepare the journal entry required in Year 4 to close the accounts related to the project. d. If Steel Top was to underestimate the cost to complete to be $1,480 million in stead of $1,888 million in Year 3, how much gross profit or loss would be recognized in each year? How much more or less gross profit would be reported in that year? How much or less gross profit would be reported in Year 4 and in total for all four years? Please prepare your response using MS Excel and use the format below to complete parts a and d. Year 1 Year 2 Year 3 Year 4 Total ? ? ? ? ? Cell ? ic. ? ? C OD ic ? ? 0 ? ? Cumulative expense ? ? ? ? Expense previously recognized ? ? ? ? Current-year expense without loss Additional expense for expected ? ? ? ? ? ? ? ? ? loss Total expense for the year ? ? ? Current-year gross profit (loss) (in $ millions) Page Num: 2 Page: 2/2 Section: 1/1 Row: 1 Column: 1 Words: 337 Spell Check Local backup on | ||] !!!! -O ? + 106 % D