Wynn, IncHas a Contract to Construct a Large Hotel for $12,000,000

question 44

Short Answer

Wynn, Inc.has a contract to construct a large hotel for $12,000,000.The contract was signed on January 2, 2010 and it was expected that the hotel would be complete on December 31, 2013.At the date the contract was signed, Wynn, Inc.anticipated the costs of construction would total $11,000,000.At the end of 2011 the total cost estimate rose to $11,870,000 and at the end of 2012 the total cost estimate rose to $12,400,000.Due to certain circumstances, Wynn, Inc.believes there are inherent hazards in the contract beyond the normal, recurring business risks.Wynn, Inc.expects to recover all its costs under the contract.Under these conditions, what amount of loss, if any, should Wynn, Inc.recognize in each of the following years?

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