Lakeview Home Builders Limited (LHBL) is a large public company that specializes in building custom homes....

 

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Lakeview Home Builders Limited (LHBL) is a large public company that specializes in building custom homes. On January 1, 2021, it started a $3. million contract that was expected to take just under three years to complete. Data on costs incurred, progress billings, and progress payments for the contract are presented below: Costs incurred during year Estimated costs to complete Progress billings during year. Progress payments received 2021 $ 900,000 1,400,000 900,000 800,000 2022 $1,000,000 1,200,000 1,050,000 850.000 2023 $1,000,000 0 1,050,000 1,200,000 Required 1. LHBL's CEO would like to account for this contract using a method other than the percentage-of-completion method. Briefly describe what other method under both IFRS and ASPE that could be used by LHBL and when it would be appropriate (approximately two sentences). (2 marks) 2. Ignore your answer to part a) and prepare all journal entries (show all your calculations) required under the percentage-of-completion method for 2022. (Note: journal entries not required for 2021 or 2023.) (6 marks) 3. Show how the construction contract would be reported on the statement of financial position (SFP) and the statement of comprehensive income for the year ended December 31, 2022. (4 marks) 4. Calculate the gross profit or loss that would be recorded by LHBL in 2023 under the percentage-of-completion method. (3 marks) Lakeview Home Builders Limited (LHBL) is a large public company that specializes in building custom homes. On January 1, 2021, it started a $3. million contract that was expected to take just under three years to complete. Data on costs incurred, progress billings, and progress payments for the contract are presented below: Costs incurred during year Estimated costs to complete Progress billings during year. Progress payments received 2021 $ 900,000 1,400,000 900,000 800,000 2022 $1,000,000 1,200,000 1,050,000 850.000 2023 $1,000,000 0 1,050,000 1,200,000 Required 1. LHBL's CEO would like to account for this contract using a method other than the percentage-of-completion method. Briefly describe what other method under both IFRS and ASPE that could be used by LHBL and when it would be appropriate (approximately two sentences). (2 marks) 2. Ignore your answer to part a) and prepare all journal entries (show all your calculations) required under the percentage-of-completion method for 2022. (Note: journal entries not required for 2021 or 2023.) (6 marks) 3. Show how the construction contract would be reported on the statement of financial position (SFP) and the statement of comprehensive income for the year ended December 31, 2022. (4 marks) 4. Calculate the gross profit or loss that would be recorded by LHBL in 2023 under the percentage-of-completion method. (3 marks)

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1 LHBL could use the completed contract method under IFRS and the completed and delivered m... View the full answer