Question: [Contract accounting; CFAO adapted On December 31. 1999, I.AS] Construction entered into a major long-term concatenate n with the following terms:
- Total contract price $3,000,000
- Total expected cost $2.400.000
Construction is expected to take three years. Production ants and cash flows are shown in the following table:
a. Show the revenue ad pretax income for each year under both the percentage-of-completion and completed contract methods.
b. Show the balance sheet accounts at December 31. 2000 resulting from the contract under the
(i) Percentage-of-completion method
(ii) Completed contract method
c. Assam that thud projected costs increase by 31041.000 and the change in estimate is made at December 31, 2000 Compute the revenue and pretax income for 2001 under the re-vised assumption.