E18-16B (Recognition of Revenue on Long-Term Contract and Entries)Young Tree Construction Company uses the percentage-of-completion method of accounting. In 2014, Young Tree began work under a contract with a contract price of $1,500,000. Other details fo

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E18-16B (Recognition of Revenue on Long-Term Contract and Entries)Young Tree Construction Company uses the percentage-of-completion method of accounting. In 2014, Young Tree began work under a contract with a contract price of $1,500,000. Other details follow:

                                                                                                2014                             2015    

Costs incurred during the year                                          $980,000                     $1,375,000

Estimated costs to complete, as of December 31               420,000                            –0–

Billings to date                                                                     800,000                       1,500,000

Collections to date                                                               250,000                       1,500,000

Instructions

(a) What portion of the total contract price would be recognized as revenue in 2014? In 2015?

(b) Assuming the same facts as those above except that Young Tree uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2015?

    • 7 years ago
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