The company spent an accumulated total of euro6 million how


Revenue Recognition for Long-Term Contracts: Percentage-of-Completion Method

Stelle Technology has a contract to build a network for a customer for a total sales price of €10 million. The network will take an estimated three years to build, and total building costs are estimated to be €6 million. Stelle recognizes long-term contract revenue using the percentage-of-completion method and estimates percentage complete based on expenditure incurred as a percentage of total estimated expenditures.

1. At the end of Year 1, the company had spent €3 million. Total costs to complete are estimated to be another €3 million. How much revenue will Stelle recognize in Year 1?

2. At the end of Year 2, the company had spent an additional €2.4 million for an accumulated total of €5.4 million. Total costs to complete are estimated to be another €0.6 million. How much revenue will Stelle recognize in Year 2?

3. At the end of Year 3, the contract is complete. The company spent an accumulated total of €6 million. How much revenue will Stelle recognize in Year 3?

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Cost Accounting: The company spent an accumulated total of euro6 million how
Reference No:- TGS0814634

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