5/10/2018 REQUIRED HOMEWORK - MODULE 5
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5/10/2018 REQUIRED HOMEWORK - MODULE 5
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My Subscriptions / Courses / MGMT E-2600:01-Financial Statement Analysis [SPRING 2018] / Module 5 / REQUIRED HOMEWORK - MODULE 5
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QUESTION 1 Correct 1.00 points out of 1.00
Computing Revenues under Long-Term Contracts
Camden Corporations agreed to build a warehouse for a client at an agreed contract price of $ 900,000. Expected (and actual) costs for the
warehouse follow: 2016, $202,500; 2017, $337,500; and 2018, $135,000. The company completed the warehouse in 2015. Compute revenues,
expenses, and income for each year 2016 through 2018, and for all three years combined, using the cost-to-cost method.
Cost-to-Cost Method
% of total
Costs expected Revenue
Year incurred costs recognized Income
2016 $ 202,500 30 % $ 270,000 $ 67,500
2017 337,500 50 % 450,000 112,500
2018 135,000 20 % 180,000 45,000
Total $ 675,000 $ 900,000 $ 225,000
Cost-to-Cost Method Completed
Contract
Year
Costs
incurred
Percent
of total
expected
costs
Revenue
recognized
(percentage
of costs
incurred
total
contract
amount)
Income
(Revenue
– Costs
incurred)
Revenue
recognized Income
2016 $202,500 30% $270,000 $67,500 $ 0 $ 0
2017 337,500 50% 450,000 112,500 0 0
2018 135,000 20% 180,000 45,000 900,000 225,000
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