Pensacola Building Co

question 40

Essay

Pensacola Building Co. signed a contract to build a road over a period of three years for a price of $600,000.
Information relating to the performance of the contract is summarized below:
Required:
a. Assuming Pensacola satisfies its performance obligation over time, show how Construction in Progress would be disclosed on the balance sheet at December 31, 2016.
b. Assuming Pensacola satisfies its performance obligation over time, prepare all 2017 entries.

---

Definitions:

Testator

An individual who has made a will or testament to dictate the distribution of their assets after their death.

Testamentary Capacity

The legal and mental ability of an individual to make or alter a valid will, including understanding the nature of the document and the assets.

Prudent Person Rule

A legal principle requiring that a person in charge of others' assets manage those assets with the care, diligence, and judgment that a prudent person would under similar circumstances.

Uniform Principal and Income Act

A statutory framework adopted by some states to standardize how income and principal from trusts and estates are allocated.