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What is the total amount of revenue from long-term contracts

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Reference no: EM132493573

Seasons Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of €1,550,000 each quarter. The total contract price is €18,600,000 and Seasons estimates total costs of €17,750,000. Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2018.

Question 1. At December 31, 2018, Seasons estimates that it is 30% complete with the construction, based on costs incurred. What is the total amount of Revenue from Long- Term Contracts recognized for 2018 and what is the balance in the Accounts Receivable account assuming Cannon Company has not yet made its last quarterly payment?

Revenue Accounts Receivable

a. €6,200,000 €6,200,000

b. €5,325,000 €1,550,000

c. €5,580,000 €1,550,000

d. €5,325,000 €6,200,000

Question 2. At December 31, 2019, Seasons Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to €18,000,000 due to unanticipated price increases. What is the total amount of Construction Expenses that Seasons will recognize for the year ended December 31, 2019?

a. €13,500,000

b. €7,875,000

c. €7,987,500

d. €8,175,000

Question 3. At December 31, 2019, Seasons Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to €18,000,000 due to unanticipated price increases. What is reported in the statement of financial position at December 31, 2019 for Seasons as the difference between the Construction in Process and the Billings on Construction in Process accounts, and is it a debit or a credit?

Difference between the accounts Debit/Credit

a. €4,225,000 Credit

b. €1,550,000 Debit

c. €1,100,000 Debit

d. €1,550,000 Credit

Question 4. Seasons Construction completes the remaining 25% of the building construction on December 31, 2020, as scheduled. At that time the total costs of construction are €18,750,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that Seasons will recognize for the year ended December 31, 2020?

Revenue Expenses

a. €18,600,000 €18,750,000

b. €4,650,000 € 4,687,500

c. €4,650,000 € 5,250,000

d. €4,687,500 € 4,687,500

Reference no: EM132493573

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