Juan Corporation Signed a Contract for $975,000 to Construct a Small

question 61

Essay

Juan Corporation signed a contract for $975,000 to construct a small shopping centre for a large retail conglomerate.Construction is expected to take three years and cost $750,000.
Actual results were: $\begin{array}{lll}\text { Year }&\text { Costs }&\text { Receipts }\\\hline 2012 & \$ 150,000 & \$ 125,000 \\2013 & \$ 375,000 & \$ 375,000 \\2014 & \$ 225,000 & \$ 475,000\end{array}$ Required:
A) Compute the revenue and expenses for each year using the percentage-of-completion method.B) Compute the revenue and expenses for each year using the cost recovery method.
C) Compute the gross profit margin for each year under each of the two methods.
D) Which method of revenue recognition would be more useful to the shareholders of Juan Corporation? Why?

• A) Compute the revenue and expenses for each year using the percentage-of-completion method.B) Compute the revenue and expenses for each year using the cost recovery method.
• C) Compute the gross profit margin for each year under each of the two methods.
• D) Which method of revenue recognition would be more useful to the shareholders of Juan Corporation? Why?

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Definitions:

Antiprostitution Movement

Social and legal campaigns aimed at prohibiting or reducing prostitution based on moral, health, or social concerns.

William Lloyd Garrison

A prominent American abolitionist, journalist, and social reformer who was best known for founding and publishing the anti-slavery newspaper "The Liberator."

Abolitionist Movement

A movement aimed at ending slavery and the slave trade, prevalent in the 18th and 19th centuries, especially in the United States and Britain.

The Liberator

A title often associated with Simon Bolivar, a military and political leader who played a key role in Latin America's successful struggle for independence from the Spanish Empire.