Long-term Contracts

In 2017, Tarlo Company agrees to construct a highway for Brice County over a 3-year period (2017 through 2019). The contract price is $1,200,000, and the construction costs (both actual and estimated) total $705,000 for the 3 years. Tarlo's estimate of progress toward satisfaction of the performance obligation at the end of each year is as follows: 2017, 20%; 2018, 75%; 2019, 100%.

Required:

1. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year assuming the performance obligation is determined to be satisfied over time.

Tarlo Company
Gross Profit: Percentage-of Completion Method
2017 through 2019
	Amount
2017	$
2018	$
2019	$
Total gross profit	$

2. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year assuming the performance obligation is satisfied at a point in time. If an amount is zero, enter "0".

Tarlo Company
Gross Profit: Completed-Contract Method
2017 through 2019
	Amount
2017	$
2018	$
2019	$
Total gross profit	$