At the beginning of 2017 Premier Yachts enters into a contract to build a luxury yacht for a customer that is expected to take three years to complete.The contract price is $12,000,000.Completion is scheduled for the end of 2019.Premier's year end is December 31.The following is a year by year summary of construction costs incurred and the estimated costs to complete the projects at the end of each year.
Required: Prepare the entries under the completed-contract method for 2017
Definitions:
Deferred Expenses
Assets created when purchased in the past before being used to generate revenues; need to be adjusted at the end of the period to reflect the amount of expense incurred by using the assets over time.
Assets
Resources owned or controlled by a business, entity, or individual, which are expected to produce economic value or future benefits.
Total Asset Turnover Ratio
A financial metric that measures the efficiency of a company at using its assets to generate revenue.
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