Question

Seasons Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1,550,000 each quarter. The total contract price is $18,600,000 and Seasons estimates total costs of $17,750,000. Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At the end of 2022, estimated total costs were $18,000,000. Seasons Construction completes the remaining 25% of the building construction on December 31, 2023, as scheduled. At that time the total costs of construction are $18,750,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that Seasons will recognize for the year ended December 31, 2023? Revenue Expenses $18,600,000 $18,750,000 $ 4,650,000 $ 4,687,500 $ 4,650,000 $ 5,250,000 $ 4,687,500 $ 4,687,500

Answer 1

Answer:

SEASONS CONSTRUCTION

At the end of Dexc 31 2023

The revenue to be recognized will be = 25% * $18,600,000 =  $4.650,000

The cost to be recognized =  25% * $18,750,000 =  $4,687,500

Since percentage of completion method is being used, the revenue and cost to be recognized for the ywear 2023 will be based on the proportion of work completed in that year.

Explanation: