Bower Construction Comp.has consistently used the percentage-of-completion method for recognizing revenue on its long-term contracts.During 2010 Bower entered into a fixed-price contract to construct an office building for $8,000,000.Information relating to the contract is as follows:
Required (Show Calculations):
1.Compute contract costs incurred during 2010,2011 and 2012.
2.Determine how much gross profit Bower should recognize in 2012.
3.Under what conditions would it not be reasonable for a company to use the percentage of completion method of recognizing revenue on long-term contracts?
4.If Bower had used the completed contract method of accounting for this long-term contract how much gross profit would it have earned in 2010,2011 and 2012?
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An exceptionally skilled or valuable player in a sports team or any field, recognized for their talent and contributions.
Injury
Physical harm or damage to someone's body caused by an accident or an act of violence.
Marginal Benefit
The supplementary value obtained from the consumption of an extra unit of a good or service.
Optimal Quantity
The ideal amount of a good or service that maximizes efficiency or utility, taking into account costs and benefits.
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