E5-25. Constructing and Assessing Income Statements Using Percentage-of-Completion (LO1) On March 15, 2014, Frankel Construction contracted...

 

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E5-25. Constructing and Assessing Income Statements Using Percentage-of-Completion (LO1) On March 15, 2014, Frankel Construction contracted to build a shopping center at a contract price of $125 million. The schedule of expected (which equals actual) cash collections and contract costs follows: Year Cash Collections 2014..... $ 30 million 2015..... 50 million 2016..... 45 million Total $125 million .... Cost Incurred $20 million 45 million 35 million $100 million a. Calculate the amount of revenue, expense, and net income for each of the three years 2014 through 2016 using the percentage-of-completion revenue recognition method. (Round percents to the near- est whole number.) b. Discuss whether or not the percentage-of-completion method provides a good measure of this construction company's performance under the contract. E5-25. Constructing and Assessing Income Statements Using Percentage-of-Completion (LO1) On March 15, 2014, Frankel Construction contracted to build a shopping center at a contract price of $125 million. The schedule of expected (which equals actual) cash collections and contract costs follows: Year Cash Collections 2014..... $ 30 million 2015..... 50 million 2016..... 45 million Total $125 million .... Cost Incurred $20 million 45 million 35 million $100 million a. Calculate the amount of revenue, expense, and net income for each of the three years 2014 through 2016 using the percentage-of-completion revenue recognition method. (Round percents to the near- est whole number.) b. Discuss whether or not the percentage-of-completion method provides a good measure of this construction company's performance under the contract.

Answer rating: 100% (QA)

ANSWER b No the percentage of com pletion method does not p... View the full answer