Question: Problem #1 - Revenue Recognition Summary data for Benedict Construction Co.'s (BCC) Job 1227, which was completed in 2017, are presented below: Bid Price: $450,000
| Problem #1 - Revenue Recognition | ||||||||||
| Summary data for Benedict Construction Co.'s (BCC) Job 1227, which was completed in 2017, are presented below: | ||||||||||
| Bid Price: | $450,000 | |||||||||
| Contract cost: | 2016 | -180,000 | ||||||||
| 2017 | -195,000 | |||||||||
| Gross Profit: | 75,000 | |||||||||
| Estimated Cost to Complete: | ||||||||||
| 12/31/2016 | $200,000 | |||||||||
| 12/31/2017 | 0 | |||||||||
| 1. Assuming BCC uses the percentage-of-completion method of revenue recognition, the gross profit recognized in 2016 would be (rounded to the nearest thousand): | ||||||||||
| 2. Assuming BCC uses the percentage-of-completion method of recognition the gross profit recognized in 2017 would be (rounded to the nearest thousand): | ||||||||||
| 3. Assuming BCC used the completed contract method to recognize revenue, what would gross profit have been in 2016 and 2017 (rounded to the nearest thousand)? | ||||||||||
| 2016 | 2017 | |||||||||
| a. $36,000 | $39,000 | |||||||||
| b. $30,000 | $45,000 | |||||||||
| c. $70,000 | $5,000 | |||||||||
| d. $ 0 | $75,000 | |||||||||
| 4. Assuming BCC used the cost recovery method to recognize revenue under IFRS, what would gross profit have been in 2016 and 2017 (rounded to the nearest thousand)? | ||||||||||
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