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Gross Profit and Revenue Recognition Analysis for Sanderson Construction (2011-2013)

The assignment analyzes the gross profit and revenue recognition practices for Sanderson Construction from 2011 to 2013.

Eli Simmons
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Gross Profit and Revenue Recognition Analysis for Sanderson Construction(2011-2013)E5-10–Sanderson Construction1.Determine the amount of gross profit or loss to be recognized in each of the three years using thepercentage-of-completion method.2.How much revenue will Sanderson report in its 2011 and 2012 income statements related to thiscontract using the percentage-of-completion method?3.Determine the amount of gross profit or loss to be recognized in each of the three years using thecompleted contract method.4.Determine the amount of revenue, cost, and gross profit or loss to be recognized in each of the threeyears under IFRS, assuming that using the percentage-of-completion method is not appropriate.5.Suppose the estimated costs to complete at the end of 2012 are $80 million instead of $60 million.Determine the amount of gross profit or loss to be recognized in 2012 using the percentage-of-completion method.Exercise 5-10Requirement 1($ in millions)201120122013Contract price$220$220$220Actual costs to date40120170Estimated costs to complete12060-0-Total estimated costs160180170Estimated gross profit (actual in 2013)$ 60$ 40$ 50Gross profit (loss) recognition:

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Subject
Accounting

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